What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 552 added, 690 removed, 789 unchanged (61% of the section changed)

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See “Forward-Looking Statements” at the end of this discussion.

Additional company information, including this Form 10-K, is available on SEDAR at www.sedar.com and on the U.S.

Additional company information, including this Form 10-K, is available on SEDAR+ at www.sedarplus.ca and on the U.S.

Securities and Exchange Commission (the “SEC”) website at www.sec.gov .

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Bausch Health Companies Inc.

(“we”, “us”, “our”, the “Company” or “Bausch Health”) is a multinational, specialty pharmaceutical and medical device company that develops, manufactures and markets, primarily in the therapeutic areas of gastroenterology (“GI”) and dermatology, a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products and medical aesthetic devices and, through its majority ownership of Bausch + Lomb Corporation (“Bausch + Lomb”), branded, and branded generic pharmaceuticals, OTC products and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment) in the therapeutic area of eye health.

(“we”, “us”, “our”, the “Company” or “Bausch Health”) is a global, diversified specialty pharmaceutical and medical device company that develops, manufactures and markets, primarily in the therapeutic areas of gastroenterology (“GI”), hepatology, neurology and dermatology, a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products and aesthetic medical devices and, through its approximately 88% ownership of Bausch + Lomb Corporation (“Bausch + Lomb”), branded, and branded generic pharmaceuticals, OTC products and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment) in the therapeutic area of eye health.

The Company’s products are marketed directly or indirectly in approximately 90 countries.

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Our portfolio of products falls into five reportable segments:

(i) Salix, (ii) International, (iii) Solta Medical, (iv) Diversified Products and (v) Bausch + Lomb.

(i) Salix, (ii) International, (iii) Solta Medical, (iv) Diversified and (v) Bausch + Lomb.

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

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of GI products.

Sales of the Xifaxan ® product line represented approximately 80% of the Salix segment’s revenues.

• The International 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 Solta Medical segment consists of global sales of Solta Medical (“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, (iii) Ortho Dermatologics (dermatological products) and (iv) dentistry products.

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

Sales of the Xifaxan ® product line represented approximately 80% of Salix segment revenues.

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

• The Solta Medical segment consists of global sales of Solta Medical aesthetic medical devices.

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

(i) pharmaceutical products in the areas of neurology and certain other therapeutic classes, (ii) dermatology products, (iii) generic pharmaceutical products and (iv) dentistry products.

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

For additional discussion of our reportable segments, see the discussion in Item 1.

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Separation of the Bausch + Lomb Eye Health Business

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

During May 2022, a wholly owned subsidiary of the Company (the “Selling Shareholder”) sold shares of Bausch + Lomb pursuant to the initial public offering (“IPO”) of Bausch + Lomb (the “B+L IPO”).

The underwriters partially exercised the over-allotment option granted by the Selling Shareholder.

The Company indirectly holds 310,449,643 common shares of Bausch + Lomb, which represents approximately 89% of Bausch + Lomb’s outstanding common shares.

We continue to believe that completing the B+L Separation makes strategic sense.

On August 6, 2020, we announced our plan to separate our eye health business consisting of our Bausch + Lomb global Vision Care, Surgical and Pharmaceuticals (formerly known as Ophthalmic Pharmaceuticals) businesses into an independent publicly traded entity, Bausch + Lomb, from the remainder of Bausch Health Companies Inc.

(the “B+L Separation”).

On May 5, 2022, the registration statement related to the initial public offering of Bausch +Lomb (the “B+L IPO”) was declared effective, and Bausch + Lomb’s common stock began trading on the New York Stock Exchange and the Toronto Stock Exchange, in each case under the ticker symbol “BLCO” on May 6, 2022.

Prior to the effectiveness of the registration statement, B+L was an indirect wholly-owned subsidiary of Bausch Health.

On May 10, 2022, a wholly owned subsidiary of the Bausch Health sold 35,000,000 common shares of Bausch + Lomb pursuant to the B+L IPO.

Upon the closing of the B+L IPO and after giving effect to the subsequent partial exercise of the over-allotment option by the underwriters, Bausch Health indirectly holds 310,449,643 common shares of Bausch + Lomb, which represents approximately 88% of B+L’s outstanding common shares as of the date of this filing.

We continue to believe the separation of B+L, which includes the transfer of all or a portion of our remaining direct or indirect equity interest in B+L to our shareholders, makes strategic sense.

The completion of the B+L Separation is subject to the achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals.

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• Bausch Health excluding Bausch + Lomb - a diversified pharmaceutical company with leading positions in gastroenterology, hepatology, dermatology, neurology and international pharmaceuticals, and aesthetic medical devices.

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

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

We believe the B+L IPO was a large step in creating two attractive but dissimilar businesses.

The remaining pharmaceutical entity will comprise a diversified portfolio of our leading durable brands across the Salix, International, Solta Medical and Diversified businesses;

• Bausch + Lomb - a fully integrated eye health company built on the iconic Bausch + Lomb brand and its long history of innovation.

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

Further, the B+L Separation will allow us and the market to compare the operating results of each entity with other “pure play” peer companies.

Further, the B+L Separation will allow us and the market to compare the operating results of each entity with other peer companies.

Although management believes the B+L Separation will unlock value, there can be no assurance that it will be successful in doing so.

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

Our Focus on Value

Since 2016, we have been executing a multi-year plan designed to transform and bring out value in our Company, which includes focus on, among other factors, our:

Focus on Value and Core Businesses

We continue to execute on a multi-year plan designed to transform and bring out value in our Company, which includes focus on, among other factors, our:

product portfolio, infrastructure, geographic footprint, capital structure and risk management.

As discussed below, we have taken actions that among other things include:

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

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

We believe that these and other actions we have taken have helped to focus our operations and improve our capital structure.

These actions also presented us with an opportunity to unlock potential value across our portfolio of assets by separating our pharmaceutical and eye health businesses.

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

Focus on Core Businesses

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

In line with this focus on our core businesses, we have:

(i) made measurable progress in effectively managing our capital structure, including taking actions to reduce the principal balances of our long-term debt, (ii) directed capital allocation to drive growth within these core businesses, (iii) divested assets to improve our capital structure and simplify our business, (iv) resolved certain of the Company’s legacy litigation matters originating back to 2015 and prior, (v) increased our efforts to improve patient access and (vi) continued to invest in sustainable growth drivers to position us for long-term growth.

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

(i) made measurable progress in effectively managing our capital structure, including taking actions to reduce the principal balances of our long-term debt, (ii) directed capital allocation to drive growth within these core businesses, (iii) divested assets to improve our capital structure and simplify our business, (iv) increased our efforts to improve patient access and (v) continued to invest in sustainable growth drivers to position us for long-term growth.

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

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

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Effectively Managing Our Capital Structure

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

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

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

For additional details on the B+L Separation, see “Separation of the Bausch + Lomb Eye Health Business” in Note 2, “SIGNIFICANT ACCOUNTING POLICIES” to our audited Consolidated Financial Statements.

Managing Our Capital Structure 2016 through 2021

Since 2016, we have been executing and continue to execute on our plan to improve our Company’s capital structure.

As a result of a series of debt repayments and transactions from 2016 through 2021, the Company had positioned itself to add value through the B+L Separation while at the same time providing for the appropriate capitalization and leverage of these businesses post-separation.

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

Securities Litigation settlement (discussed in the subsequent section titled “LIQUIDITY AND CAPITAL RESOURCES”), we repaid (net of additional borrowings) approximately $10,000 million of long-term debt during the period January 1, 2016 through December 31, 2021 using the net cash proceeds from divestitures of non-core assets and cash generated from operations.

Repurchases and Retirement of Senior Unsecured Notes in 2024

During January 2024, through a series of transactions we repurchased and retired outstanding senior unsecured notes with an aggregate par value of $250 million in the open market for approximately $238 million using cash on hand.

Managing Our Capital Structure in 2023

As discussed further below, during 2022, we reduced the aggregate principal amount of our debt obligations by approximately $3,800 million, as we:

B+L Term Loan B Facility and Senior Secured Notes

On September 29, 2023, Bausch + Lomb entered into a new term loan facility (“B+L September 2028 Term Loan B Facility”) of $500 million and issued new Senior Secured Notes (“B+L October 2028 Secured Notes”) of $1,400 million to finance the $1,750 million upfront payment related to the acquisition of XIIDRA ® and certain other ophthalmology assets from Novartis and associated acquisition-related transaction and financing costs (as discussed in “-Strategic Acquisitions” below and Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements).

Accounts Receivable Credit Facility

On June 30, 2023, certain of our subsidiaries entered into a Credit and Security Agreement (the “AR Facility Agreement”) with certain third-party lenders, providing for a non-recourse financing facility collateralized by certain accounts receivable originated by a wholly-owned subsidiary of the Company (the “AR Credit Facility”).

The AR Facility Agreement provides for an up to $600 million facility, subject to certain borrowing base tests.

Under the AR Credit Facility, a special purpose entity (the “Borrower”), as the borrower, purchases accounts receivable originated by a wholly-owned subsidiary of the Company, which collateralize borrowings under the AR Credit Facility.

The Borrower is a bankruptcy remote entity that is unrestricted under the Company’s debt covenants, and which is consolidated by the Company.

Borrowings under the AR Credit Facility are in U.S.

dollars and bear interest at a rate per annum equal to the sum of the one month term SOFR plus 6.65%.

The Company is required to pay commitment fees of 0.75% multiplied by the lesser of:

(i) the unfunded portion of the lenders’ commitments or (ii) 50% of the total lenders’ commitments.

As of December 31, 2023, there were $350 million in outstanding borrowings under the AR Credit Facility.

Maturities and Mandatory Payments

Maturities and mandatory payments of our principal balances of debt obligations as of December 31, 2023 were as follows:

(in millions) 2024 2025 2026 2027 2028 2029 Thereafter Total

Total debt obligations $ 155 $ 2,790 $ 892 $ 6,748 $ 7,219 $ 1,609 $ 1,593 $ 21,006

Managing Our Capital Structure in 2022

During 2022, we improved our capital structure and reduced the aggregate principal amount of our debt obligations by approximately $3,800 million, as we:

(i) utilized the net proceeds from the B+L IPO which closed on May 10, 2022, to make repayments of debt, (ii) reduced our debt through open market repurchases of debt with a principal value of approximately $927 million for approximately $550 million, (iii) extended the maturities of our debt through refinancing and (iv) completed an exchange offer which reduced the outstanding principal balance of our debt by $2,469 million by exchanging $5,594 million of aggregate principal value of existing unsecured senior notes (the “Existing Unsecured Senior Notes”) for newly issued secured notes with an aggregate principal balance of $3,125 million (the “Exchange Offer”).

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These transactions included:

• On February 10, 2022, the Company issued (the “2022 Notes Issuance”) $1,000 million aggregate principal amount of 6.125% Senior Secured Notes due February 2027 (the “February 2027 Secured Notes”) .

• 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”) .

• On May 10, 2022:

• The B+L IPO closed, with aggregate net proceeds (including from the partial exercise of the over-allotment option by the underwriters), after deducting underwriting commissions, of approximately $675 million.

• The Company entered into the 2022 Amended Credit Agreement as defined and discussed in further detail below, under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”.

The 2022 Amended Credit Agreement consists of new term loans of $2,500 million and a revolving credit facility of $975 million.

• Bausch + Lomb entered into the B+L Credit Agreement, as defined and discussed in further detail below under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”.

• The B+L IPO closed, with aggregate net proceeds (including the partial exercise of the over-allotment option by the underwriters), after deducting underwriting commissions, of approximately $675 million.

• The Company entered into the 2022 Amended Credit Agreement as defined and discussed in Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements.

The 2022 Amended Credit Agreement consists of term loans of $2,500 million and a revolving credit facility of $975 million.

• Bausch + Lomb entered into the B+L Credit Agreement, as defined and discussed in Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements.

The B+L Credit Agreement provides for a five-year term loan facility in an initial principal amount of $2,500 million and also provides for a five-year revolving credit facility of $500 million.

The net proceeds from these transactions, along with cash on hand, allowed us to:

(i) repay certain amounts outstanding under our then existing June 2025 Term Loan B Facility and November 2025 Term Loan B Facility (each as defined and discussed in further detail below under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”), (ii) replace our existing revolving credit facility which was due to mature in 2023, with revolving credit facilities that mature in 2027, (iii) redeem in full all of our then outstanding 6.125% Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes”) and (iv) replace our then remaining amounts outstanding under our June 2025 Term Loan B Facility and November 2025 Term Loan B Facility with term loan facilities that expire in 2027.

Early Extinguishment of Debt - During June 2022 and December 2022, through a series of transactions we repurchased and retired, outstanding senior notes with an aggregate par value of $927 million in the open market, for approximately $550 million using:

(i) repay certain amounts outstanding under our then existing June 2025 Term Loan B Facility and November 2025 Term Loan B Facility (each as defined and discussed in Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements), (ii) replace our existing revolving credit facility which was due to mature in 2023, with revolving credit facilities that mature in 2027, (iii) redeem in full all of our then outstanding 6.125% Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes”) and (iv) replace our then remaining amounts outstanding under our June 2025 Term Loan B Facility and November 2025 Term Loan B Facility with term loan facilities that were to expire in 2027.

Early Extinguishment of Debt - During 2022, through a series of transactions we repurchased and retired outstanding senior unsecured notes with an aggregate par value of $927 million in the open market for approximately $550 million using:

(i) the net proceeds from the partial exercise of the over-allotment option in the B+L IPO by the underwriters, after deducting underwriting commissions, (ii) amounts available under our revolving credit facility and (iii) cash on hand.

As a result of these transactions, we recognized a gain on the extinguishment of debt of approximately $369 million, net of write-offs of debt premiums, discounts and deferred issuance costs, representing the differences between the amounts paid to retire the senior unsecured notes and their carrying value.

Exchange Offer - As discussed in further detail below under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”, we made the strategic decision based on the fair value of our Senior Unsecured Notes to undertake the Exchange Offer in September 2022.

The (i) repayment of the June 2025 Term Loan B Facility, November 2025 Term Loan B Facility and 2023 Revolving Credit Facility and (ii) redemption of the April 2025 Senior Unsecured notes were accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $63 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value.

As a result of these transactions and the open market repurchases, the Company realized a net gain on early extinguishment of $113 million.

September 2022 Exchange Offer - As discussed in further detail below under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”, we made the strategic decision based on the fair value of our Senior Unsecured Notes to undertake the Exchange Offer in September 2022.

We exchanged certain validly tendered existing senior unsecured notes, with an aggregate outstanding principal balance of approximately $5,594 million with maturities of 2025 through 2031 for newly issued senior secured notes, with an aggregate principal balance of approximately $3,125 million with maturities of 2028 and 2030.

After fees and expenses, the Exchange Offer reduced the principal balances of our outstanding debt obligations by $2,469 million and extended the maturities of approximately $2,400 million of principal balances coming due during the years 2025 through 2027 to the years 2028 and 2030.

We also recorded a net gain of $570 million as the future undiscounted cash flows of certain New Secured Notes (as defined in “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”) were less than the net carrying value of the Existing Unsecured Senior Notes which were exchanged.

As a result of:

(i) the 2022 Notes Issuance and Credit Agreement Refinancing (as defined below under “—Senior Secured Credit Facilities under the 2022 Amended Credit Agreement”), (ii) the early extinguishment of debt, (iii) the Exchange Offer and (iv) other debt repayments (net of additional borrowings under our Revolving Credit Facility) we reduced the principal balances of our contractual debt obligations in 2022 by approximately $3,800 million.

The contractual principal amount of our debt obligations as of December 31, 2022 and 2021 were as follows:

(in millions) December 31, 2022 December 31, 2021

Revolving Credit Facility $ 470 $ 285

Term Loan Facilities 2,437 3,823

B+L Term Loan Facility 2,488 —

Senior Secured Notes 7,905 3,850

Senior Unsecured Notes 5,798 14,900

Total long-term debt and other 19,110 22,870

Unamortized premiums, discounts and issuance costs 1,656 (216)

Total long-term debt and other, net of premiums, discounts and issuance costs $ 20,766 $ 22,654

The following table presents the contractual principal and interest payments of the New Secured Notes.

Contractual interest payments will be allocated to the reduction of the recorded premium and interest expense as presented below.

Additionally, the amount of interest which reduces the premium will be reported as a Financing activity in the Consolidated Statement of Cash Flows when paid.

(in millions) 2023 2024 2025 2026 2027 2028-2030 Total

Principal payments:

11.00% First Lien Secured Notes $ — $ — $ — $ — $ — $ 1,774 $ 1,774

14.00% Second Lien Secured Notes — — — — — 352 352

9.00% Intermediate Holdco Secured Notes — — — — — 999 999

— — — — — 3,125 3,125

Interest payments:

11.00% First Lien Secured Notes 195 195 195 195 195 196 1,171

14.00% Second Lien Secured Notes 51 49 49 49 49 148 395

9.00% Intermediate Holdco Secured Notes 75 90 90 90 90 45 480

321 334 334 334 334 389 2,046

$ 321 $ 334 $ 334 $ 334 $ 334 $ 3,514 $ 5,171

Interest payments recorded as:

Interest expense $ 39 $ 39 $ 36 $ 34 $ 31 $ 32 $ 211

Premium reduction 282 295 298 300 303 357 1,835

$ 321 $ 334 $ 334 $ 334 $ 334 $ 389 $ 2,046

These transactions also had the effect of reducing our cash debt service requirements over the next five years thereby providing us with additional flexibility as it relates to liquidity to operate.

Prior to these transactions, our aggregate principal contractual debt repayment requirements through the year 2026 were approximately $11,500 million.

As a result of these transactions, as of December 31, 2022, we have reduced our aggregate principal contractual debt repayment requirements through the year 2026 to approximately $4,000 million.

Maturities of our principal balances of debt obligations as of December 31, 2022 and 2021, were as follows:

(in millions) December 31, 2022 December 31, 2021

2023 $ 150 285

2025 2,789 9,723

2026 891 1,500

2027 6,938 2,250

2028 - 2031 8,192 9,112

Total debt obligations $ 19,110 $ 22,870

We believe these transactions improve our overall capitalization and leverage.

The secured notes issued in the Exchange Offer consist of:

(i) $1,774 million in aggregate principal amount of new 11.00% First Lien Secured Notes due 2028 (the “11.00% First Lien Secured Notes”) issued by the Company, (ii) $352 million in aggregate principal amount of new 14.00% Second Lien Secured Notes due 2030 (the “14.00% Second Lien Secured Notes”, and, together with the 11.00% First Lien Secured Notes, the “New BHC Secured Notes”) issued by the Company and (iii) $999 million in aggregate principal amount of new 9.00% Senior Secured Notes due 2028 (the “9.00% Intermediate Holdco Secured Notes”, and, together with the New BHC Secured Notes, the “New Secured Notes”) issued by 1375209 B.C.

(“Intermediate Holdco”), an existing wholly-owned unrestricted subsidiary of the Company that held 38.5% of the issued and outstanding common shares of Bausch + Lomb as of December 31, 2023.

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

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

Continue to Manage our Capital Structure

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

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

We believe that the outcome of this process allows us to better drive value in our product portfolio and generate operational efficiencies.

R&D Investment

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As of December 31, 2023, approximately 1,450 dedicated R&D and quality assurance employees in 24 R&D facilities were involved in our R&D efforts internally.

We have approximately 140 projects in our global pipeline.

Currently, we have over 90 projects in our global pipeline.

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

Gastrointestinal

• Rifaximin - Top line results from a Phase 2 study for the treatment of overt hepatic encephalopathy with a new formulation (SSD IR) of rifaximin showed a treatment benefit.

Patients receiving 40 mg twice daily showed a statistically significant separation from placebo.

The top line results from this Phase 2 study and other clinical data of SSD in cirrhotic patients will help inform further research on potential new indications for rifaximin.

A Phase 3 study has commenced (RED-C) with patients actively enrolling for the prevention of the first episode of Overt Hepatic Encephalopathy.

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

A phase 2 study with novel dosage formulation is currently enrolling patients for the treatment of sickle cell disease.

• Rifaximin - Development of a fit for purpose Patient Reported Outcomes tool for small intestinal bacterial overgrowth, or “SIBO”, is continuing in 2023.

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

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

• Amiselimod (S1P modulator) - A Phase 2 study to evaluate Amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis is actively enrolling.

• Rifaximin -

◦ Two global Phase 3 studies for the use of an SSD formulation for the prevention of OHE in patients with early decompensation in liver cirrhosis (RED-C) have commenced.

Enrollment of one of two global Phase 3 trials has been completed and enrollment of the second trial is on track and is expected to be completed in the first half of 2024.

We have completed scientific advisory meetings with the Medicines Evaluation Board in the Netherlands and with Health Canada, and have received feedback on the program from National Medical Products Administration in China.

We are currently planning to meet with regulatory authorities in Japan in 2024.

• Amiselimod (S1P modulator) - A Phase 2 study to evaluate Amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis completed enrollment in July 2023 and the induction portion of the study was completed in the fourth quarter of 2023.

In the topline results, Amiselimod met the primary and key secondary endpoints including clinical and endoscopic measures in the double-blind period of the study;

the open-label extension up to 52 weeks is currently ongoing.

The full data set from this trial will be available in the first half of 2024 and we plan to meet with regulatory agencies to advance the program into Phase 3.

Solta Medical

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

This product was launched in the U.S.

in March 2021.

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

benzoyl peroxide and tretinoin.

Phase 3 clinical studies have been completed and met the primary endpoints.

We are currently evaluating next steps for this project.

• IDP-126 - An acne product with a fixed combination of benzoyl peroxide, clindamycin phosphate and adapalene.

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

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

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

The bridging study has completed enrollment in July 2022.

The New Drug Application (“NDA”) was filed on December 21, 2022.

• Clear + Brilliant ® Touch - Next generation Clear + Brilliant ® laser is designed to deliver a customized and more comprehensive treatment protocol by providing patients of all ages and skin types the benefits of two wavelengths with submissions in Europe, Canada and Asia Pacific markets planned in 2024.

• Fraxel ® - Next Generation Fraxel ® is a fractionated laser device for skin resurfacing and is planned for FDA submission in the first half of 2024.

• CABTREO TM (formerly IDP - 126) - An acne product with a fixed combination of benzoyl peroxide, clindamycin phosphate and adapalene.

On October 20, 2023, the FDA approved the NDA for CABTREO TM Topical Gel (formerly Internal Development Project - 126), the first and only FDA-approved fixed-dose, triple-combination topical treatment for acne.

CABTREO TM Topical Gel was launched in the U.S.

in the first quarter of 2024.

A New Drug Submission was submitted to Health Canada on May 30, 2023.

Bausch + Lomb

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

In September 2018, we launched SiHy Daily in Japan under the branded name AQUALOX ® ONE DAY.

In August 2020, we launched SiHy Daily in the U.S.

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

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

During 2021 and 2022, Bausch + Lomb ULTRA ® ONE DAY was launched in Korea, Singapore, New Zealand, India, Taiwan, Europe, Malaysia and Indonesia.

Additional rollout is planned for 2023 and 2024.

In the second quarter of 2022, a second SiHy Daily was launched in Japan under the brand name AQUALOX ® ONE DAY UV SHIN.

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

To date, SiHy Daily has been launched in approximately 50 countries, under the brand names INFUSE ® , BAUSCH + LOMB ULTRA ® ONE DAY and AQUALOX ® ONE DAY.

Bausch + Lomb continues to plan to launch its SiHy Daily lenses into additional countries throughout 2024.

In addition, Bausch + Lomb launched its first silicone hydrogel daily disposable multifocal contact lens in May 2023 and plans to launch a toric lens in 2024.

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

We launched this product in the U.S.

in May 2018, in South Korea and UAE in December 2021 and in Canada in June 2022.

In 2022, we gained regulatory approvals in Jordan, Lebanon and the European Union and plan launches in these markets starting in 2023.

We have also acquired the right to launch into new geographies.

Currently, we have several innovative new line extension formulations under development.

The first Phase 3 study in support of these line extensions was completed.

Additional studies are currently on-going.

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

A clinical study report was completed for the cohesive OVD product (StableVisc™) during the second quarter of 2022.

FDA approval is expected in early 2023 and launch is expected during the second quarter of 2023.

• Bausch + Lomb is expanding its portfolio of premium IOLs built on the enVista ® platform with Monofocal Plus, EDOF and Trifocal optical designs for presbyopia correction.

Bausch + Lomb expects that they will be commercialized together with a new preloaded inserter with two options:

non-Toric, as well as Toric for astigmatism patients.

Bausch + Lomb anticipates launching Monofocal Plus, Trifocal and EDOF optical designs for presbyopia in the U.S.

To date, Bausch + Lomb has launched and acquired the right to launch Lumify ® in various countries.

Bausch + Lomb also has several innovative new line extension formulations that were recently launched or are under development, including Lumify ® Eye Illuminations TM which launched in the U.S.

in September 2023, Lumify ® Preservative Free, for which an NDA was submitted to the FDA in May 2023 and Lumify ® Eye Allergy, for which an NDA is expected to be submitted to the FDA during 2024.

• Bausch + Lomb is expanding its portfolio of premium intraocular lenses (“IOL”) built on the enVista ® platform with enVista Aspire TM (Monofocal Plus), enVista Envy TM Trifocal and enVista Beyond TM (extended depth of focus (“EDOF”)) optical designs with two options:

non-Toric and Toric for astigmatism patients enVista Aspire TM monofocal and toric IOLs with Intermediate Optimized optics launched in the U.S.

during October 2023 and Bausch + Lomb anticipates launching the Trifocal and EDOF optical designs for presbyopia in the U.S.

in 2024 and 2026, respectively.

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

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

Prior to 2022, Renu ® Advanced MPS was launched in the U.S., India, Brazil, Mexico, Korea, Europe, Turkey, Greece and other Latin American markets, and gained regulatory approvals in Indonesia, Malaysia, Singapore, Belarus, Taiwan and China.

In 2022, Renu ® Advanced MPS was launched in Taiwan, Czech Republic, Israel, Poland, Slovakia, China and Argentina.

We anticipate future launches in Slovenia, other parts of Europe, the Nordic regions and the Andean states.

Strategic Licensing Agreements

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In being selective, we seek to enter into only those acquisitions that provide us with significant synergies with our existing business, thereby minimizing risks to our core businesses and providing long-term growth opportunities.

During November 2022, Bausch + Lomb acquired Paragon BioTeck, Inc., an eye-care focused drug development company, having a primary emphasis on the early detection of ocular diseases.

This acquisition allows Bausch + Lomb to maximize the revenues and margins associated with Paragon’s products, for which it had previously had commercialization rights.

During December 2022, Bausch + Lomb acquired Total Titanium Inc., an ophthalmic microsurgical instrument and machined parts manufacturing company.

Bausch + Lomb believes that this acquisition is an important step in continuing to expand the surgical portfolio as it provides the opportunity to increase its manufacturing capacity and more specifically bolster its position in the ophthalmic microsurgical instrumentation market.

During September 2023, Bausch + Lomb acquired XIIDRA ® , the first and only non-steroid eye drop specifically approved to treat the signs and symptoms of dry eye disease focusing on inflammation associated with dry eye, which Bausch + Lomb expects to begin facing loss of exclusivity (“LOE”) in the second quarter of 2032, and certain other ophthalmology assets from Novartis Pharma AG and Novartis Finance Corporation (together with Novartis Pharma AG, “Novartis”) (the “XIIDRA Acquisition”).

As part of the XIIDRA Acquisition, Bausch + Lomb also acquired libvatrep (also known as SAF312), an investigational compound being studied for the treatment of chronic ocular surface pain, and AcuStream ® technology, an investigational device that may have the potential to facilitate precise dosing and accurate delivery of certain topical ophthalmic medications to the eye, and OJL332, a noncompetitive antagonist (inhibitor) of TRPV1 that is still in the pre-clinical stage.

Bausch + Lomb believes the XIIDRA Acquisition will complement and grow its existing dry eye franchise.

During July 2023, Bausch + Lomb acquired the Blink ® OTC product line of eye and contact lens drops from Johnson & Johnson Vision, which consists of Blink ® Tears Lubricating Eye Drops, Blink ® Tears Preservative Free Lubricating Eye Drops, Blink GelTears ® Lubricating Eye Drops, Blink ® Triple Care Lubricating Eye Drops, Blink Contacts ® Lubricating Eye Drops, and Blink-N-Clean ® Lens Drops (collectively, the “Blink ® Product Line”).

Bausch + Lomb believes this acquisition will enable it to continue to grow its global OTC business.

During January 2023, Bausch + Lomb acquired AcuFocus, Inc.

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Bausch + Lomb believes the IC-8 ® Apthera™ EDOF IOL will bolster its surgical portfolio by enhancing the IOL offerings, which is a strategic area of focus for the Company.

During December 2022, Bausch + Lomb acquired Total Titanium Inc., an ophthalmic microsurgical instrument and machined parts manufacturing company.

Bausch + Lomb believes that this acquisition was an important step in continuing to expand the surgical portfolio as it provides the opportunity to increase its manufacturing capacity and more specifically bolster its position in the ophthalmic microsurgical instrumentation market.

During November 2022, Bausch + Lomb acquired Paragon BioTeck, Inc.

(“Paragon BioTeck”), an eye-care focused drug development company, having a primary emphasis on the early detection of ocular diseases.

This acquisition allows Bausch + Lomb to maximize the revenues and margins associated with Paragon BioTeck’s products, for which it had previously had commercialization rights.

Divest Assets to Improve Our Capital Structure and Simplify Our Business

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The Amoun business was part of the International segment (previously included within the former Bausch + Lomb/International segment).

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

Revenues associated with Amoun were $157 million for the period of January 1, 2021 through July 26, 2021.

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

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

Resolved Legacy Legal Matters

In 2020 and 2021, we resolved certain of the Company’s legacy legal matters originating back to 2015 and prior, including settling the U.S.

Securities Litigation (see “U.S.

Securities Litigation - Opt -Out Litigation” of Note 20, “LEGAL PROCEEDINGS”).

The Securities Class Action Settlement resolves the most significant of the Company’s remaining legacy legal matters and eliminates a material uncertainty regarding the Company.

Improve Patient Access

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Bausch Health Patient Assistance Program - We are committed to supporting patients through our Patient Assistance Program which offers free medication for patients who meet income and other eligibility criteria.

If approved, patients receive their Bausch Health Companies Inc.

prescription product(s) at no cost to them for up to one year, and may be able to reapply to the program annually if they continue to meet eligibility requirements and have a valid prescription.

Cash-pay Prescription Program - The cash-pay program was concepted to address the affordability and availability of certain branded dermatology products, when insurers and pharmacy benefit managers are no longer offering those branded prescription pharmaceutical products under their designated pharmacy benefit offerings.

This program is currently limited to a select group of our brands and offered through our unique telemedicine platform which allows for patients to choose direct delivery to their home or to use a pharmacy of their choice.

If approved, patients receive their Bausch Health prescription product(s) at no cost to them for up to one year, and may be able to reapply to the program annually if they continue to meet eligibility requirements and have a valid prescription.

Cash-pay Prescription Program - The cash-pay program was adopted to address the affordability and availability of certain branded dermatology products when insurers and pharmacy benefit managers are no longer offering those branded prescription pharmaceutical products under their designated pharmacy benefit offerings.

This program is currently limited to a select group of our brands and offered through our unique telemedicine and fulfillment platform which allows for patients to choose direct delivery to their home or to use a pharmacy of their choice.

This program is designed to connect patients with dermatologists and provide patients both a predictable customer experience and a predictable cost for their dermatology health care needs.

Walgreens Fulfillment Arrangements - In the beginning of 2016, we launched a brand fulfillment arrangement with Walgreen Co.

(“Walgreens”).

Under the terms of the brand fulfillment arrangement, as amended in July 2019, we made certain dermatology and ophthalmology products available to eligible patients through patient access and co-pay assistance programs at Walgreens U.S.

Walgreens Fulfillment Arrangements - Under our brand fulfillment arrangement with Walgreen Co.

(“Walgreens”), we make certain dermatology and ophthalmology products available to eligible patients through patient access and co-pay assistance programs at Walgreens U.S.

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

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

However, our future success is also dependent upon our ability to continually refresh our pipeline, to provide a rotation of product launches that meet new and changing demands and replace other products that have lost momentum.

However, our future success is also dependent upon our ability to continually

refresh our pipeline, to provide a rotation of product launches that meet new and changing demands and replace other products that have lost momentum.

We believe we have a robust pipeline that not only provides for the next generation of our existing products but is also poised to bring new products to market.

Leveraging our Salix Infrastructure - We strongly believe in our GI product portfolio and we have implemented initiatives, including increasing our marketing presence and identifying additional opportunities outside our existing GI portfolio, to further capitalize on the value of the infrastructure we have built around these products to extend our market share.

In the first quarter of 2017, we hired approximately 250 trained and experienced sales force representatives and managers to create, bolster and sustain deep relationships with primary care physicians (“PCP”).

With approximately 70% of IBS-D patients initially presenting symptoms to a PCP, we continue to believe that the dedicated PCP sales force is well positioned to reach more patients in need of IBS-D treatment.

Our sales force has been successful in delivering consistent growth in demand for our GI products, demonstrated by our growth in Salix revenues of 33% when comparing 2022 to 2017.

We continue to seek ways to bring out further value through leveraging our existing sales force.

Investment in Our Solta Aesthetic Medical Device Business - Next generation Thermage FLX ® , a fourth-generation non-invasive treatment option using a radio frequency platform designed to optimize key functional characteristics and improve patient outcomes, has been on sale since 2017 in the U.S., Hong Kong, Japan, Korea, Taiwan, Philippines, Singapore, Indonesia, Malaysia, China, Thailand, Vietnam, Australia and various parts of Europe as part of our Solta aesthetic medical devices portfolio.

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

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

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

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

Reposition the Ortho Dermatologics Business to Generate Additional Value - Our Ortho Dermatologics business continues to work towards improving the treatment options for medical dermatology patients needing topical acne and psoriasis products.

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

The Ortho Dermatologics business is our medical dermatology business dedicated to the treatment of a range of therapeutic areas, including aesthetics, psoriasis, actinic keratosis, acne, atopic dermatitis, onychomycosis and other dermatoses.

As part of our business strategy for the Ortho Dermatologics segment, we continue to look for investments to build out our product portfolios, where we see the greatest opportunities, with a focus on topical gel and lotion products over injectable biologics.

We continue to support the use of injectable biologics;

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

Further, as topical products can, in many cases, defer the use of injectable biologics that often come with associated risk/benefit profiles, a topical product is usually readily adopted by payors, is less expensive and can be more cost-effective than injectable biologics.

Therefore, we believe topical products represent alternative treatments for physicians, payors and patients, and as the preferred choice of treatment, have the potential to drive greater volumes, generate better margins and potentially be a key contributing factor of our Ortho Dermatologics business.

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

These actions include:

(i) building on our brands including Jublia ® , Duobrii ® , Bryhali ® , Arazlo ® , Altreno ® , and Retin-A ® Micro 0.06% to improve and meet today’s physician relevance and customer service, (ii) making key investments in our core dermatological products portfolios, (iii) optimizing our go to market strategy by building on our relationships with prescribers of our products to balance our sales portfolio with the business’ profitability, (iv) refocusing our operational and promotional resources and (v) improving patient access to our Ortho Dermatologics products through our cash-pay prescription program previously discussed.

In addition, in support of our established acne product portfolio we also have a unique project in our pipeline, IDP-126, which is an acne product with a fixed combination of benzoyl

peroxide, clindamycin phosphate and adapalene.

We filed an NDA for IDP-126 in December 2022, and if approved by the FDA, we believe this product will further innovate and advance the treatment of acne.

Salix - We believe in our GI product portfolio and we have implemented initiatives, including increasing our marketing investment in Xifaxan ® , to further capitalize on the value of the infrastructure we have built around these products to extend our market share.

We have increased our investment in Xifaxan ® DTC advertising and new sales force capabilities.

We also continue to invest in our product line.

Our rifaximin SSD formulation, is under development for the prevention of OHE and other complications in patients with early decompensation in liver cirrhosis (RED-C).

The drug candidate is administered orally, and is a next-generation rifaximin formulation that acts by targeting the beta-subunit of bacterial DNA-dependent RNA polymerase.

International - Our International product portfolio includes certain newly launched products like Ryaltris ® for moderate to severe seasonal allergic rhinitis and Uceris ® Foam, an aerosol foam for distal ulcerative colitis in Canada.

We are also pursuing opportunities in the dermatology markets globally for products that address acne, atopic dermatitis, psoriasis and onychomycosis.

To address these and other opportunities we continue to invest in the training and expansion of our sales and marketing teams.

Solta Medical - More than 70% of our Solta Medical business revenues has historically come from consumables, which we believe results in a durable business model.

We continue to invest in expanding our presence in key markets, including broadening the reach of our DTC campaigns in the U.S., the expansion of Thermage ® FLX which was approved by China’s National Medical Products Administration as a medical device in January 2024 and the strengthening of our sales force in the U.S.

Diversified - We continue to seek ways to bring out value in our promoted and nonpromoted products within our Diversified portfolios.

In 2023, we increased our investments in the marketing and advertising of Aplenzin ® as the only approved major depressive disorder product for Seasonal Affective Disorder, and we also expanded our consumer awareness campaign for Jublia ® .

Adding to our established acne product portfolio, we launched CABTREO TM Topical Gel in the U.S.

in the first quarter of 2024.

In our generics portfolio, we are focused on effectively managing this portfolio of non-promoted products.

In our Dentistry business, we are increasing our investments in Arestin ® direct to patient activation and awareness campaigns.

Business Trends

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As military activity and sanctions against Russia, Belarus and specific areas of Ukraine have continued, the war has increasingly affected economic and global financial markets and exacerbated ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption.

Our revenues attributable to Russia, Ukraine and Belarus for 2022, 2021 and 2020, were as follows:

(in millions) 2022 2021 2020

Russia $ 181 $ 160 $ 137

Ukraine 7 16 19

Belarus 9 9 8

As the geopolitical situation in Eastern Europe continues to intensify, political events and sanctions are continually changing, and we continue to assess the impact that the Russia-Ukraine war has had and will have on our businesses.

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(i) interruptions or stoppage of production, (ii) damage or loss of inventories, (iii) supply-chain and product distribution disruptions in Eastern Europe, (iv) volatility in commodity prices and currencies, (v) disruption in banking systems and capital markets, (vi) reductions in sales and earnings of business in affected areas, (vii) increased costs and (viii) cyberattacks.

To date, these challenges have not yet had a material impact on our operations;

however, we anticipate that the ongoing conflict in this region and the sanctions and other actions by the global community in response will continue to affect our ability to conduct business with customers and vendors in this region.

For example, we expect to experience further disruption and delays in the supply of our products to our customers in Russia, Belarus and Ukraine.

We may also experience further decreased demand for our products in these countries as a result of the conflict.

In addition, we expect to experience difficulties in collecting receivables from such customers.

If we continue to be hampered in our ability to conduct business with new or existing customers and vendors in this region, our business, and operations, including our revenues, profitability and cash flows, could be adversely impacted.

Furthermore, if the sanctions and other retaliatory measures imposed by the global community change, we may be required to cease or suspend our operations in the region or, should the conflict worsen, we may voluntarily elect to do so.

We cannot provide assurance that current sanctions or potential future changes in these sanctions or other measures will not have a material impact on our operations in Russia, Belarus and Ukraine.

The disruption to or suspension of our business and operations in Russia, Belarus and Ukraine may have a material adverse impact on our business, financial condition, cash flows and results of operations.

We will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on our businesses.

Impacts of COVID-19 Pandemic

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

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

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

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

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

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

The outbreak of the omicron variant in China in 2022 resulted in government enforced lockdowns and other social restrictions, which impacted our ability to conduct business as usual in certain regions in China, particularly Shanghai.

lockdowns in China have impacted the demand for certain products, particularly our consumer, vision care and Solta products, as shelter in place orders limit the demand and need for the use of contact lenses and related products as well as for aesthetic medical treatments.

Our revenues in China for 2022 and 2021 were $413 million and $490 million, respectively, a decrease of $77 million and, in part, reflects the impact of the surge of the omicron variant in China.

During the third quarter of 2022, the impact on our revenues from the headwinds from China’s COVID-19 policies and lockdowns that we saw during the first half of 2022 began to normalize and we began to see growth in volumes in this region.

Additionally, government enforced lockdowns have caused certain businesses to suspend operations, creating distribution and other logistic issues for the distribution of our products and the sourcing for a limited number of raw materials.

Through the date of this filing, we have dealt with these issues in China with only a minimal impact on our manufacturing and distribution processes.

However, as the impacts of global reaction to the COVID-19 pandemic remains a fluid situation, we continue to monitor the impacts on our businesses of the COVID-19 virus and variant and subvariant strains thereof in order to timely address new issues if and when they arise.

Our revenues attributable to Russia, Ukraine and Belarus for 2023, 2022 and 2021 were approximately 2% of our total revenues in each period.

In addition, we do not have any research or manufacturing facilities in Russia, Ukraine or Belarus.

While we have been monitoring this conflict, and will continue to do so as this conflict continues to evolve, we are unable to predict the impact of this conflict on our business.

Israel-Hamas Conflict

The conflict between Israel and Hamas began during October 2023.

Our revenues attributable to Israel for 2023, 2022 and 2021 were less than 1% of our total revenues in each period.

While we have been monitoring this conflict, and will continue to do so as this conflict continues to evolve, we are unable to predict the impact of this conflict on our business.

For a further discussion of these and other risks relating to our international business, see Item 1A.

“Risk Factors” of this Form 10-K.

COVID-19 Update

During 2022, the outbreak of the omicron variant in China resulted in government enforced lockdowns and other social restrictions, which impacted our ability to conduct business as usual in certain regions in China, particularly Shanghai.

The lockdowns in China impacted the demand for certain products, particularly B+L’s Vision care and our Solta Medical products, as shelter in place orders limited the demand and need for the use of contact lenses and related products as well as for aesthetic medical treatments.

Additionally, government enforced lockdowns caused certain businesses to suspend operations, creating distribution and other logistic issues for the distribution of our products and the sourcing for a limited number of raw materials.

These lockdowns began to ease during the fourth quarter of 2022.

Our revenues in China for 2023 and 2022 were $441 million and $413 million, respectively, an increase of $28 million.

To date, we have dealt with these issues in China with only a minimal impact on our manufacturing and distribution processes and we continue to monitor the impact of COVID-19 on all aspects of our business.

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

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Global Minimum Corporate Tax Rate

On October 8, 2021, the Organisation for Economic Co-operation and Development (“OECD”)/G20 inclusive framework on Base Erosion and Profit Shifting (the “Inclusive Framework”) published a statement updating and finalizing the key components of a two-pillar plan on global tax reform originally agreed on July 1, 2021, and a timetable for implementation by 2023.

The timetable for implementation has since been extended to 2024.

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

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

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

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

The Inclusive Framework agreement must now be implemented by the OECD Members who have agreed to the plan, effective in 2024.

On December 13, 2022, the European Union member states unanimously adopted the directive to implement pillar two rules.

According to the directive, the member states are expected to enact pillar two rules into domestic law in 2023, with certain elements becoming effective for fiscal years beginning on or after December 31, 2023.

The OECD has published model rules and other guidance with respect to pillar two, which are generally consistent with the agreement reached by the Inclusive Framework in October 2021.

On February 1, 2023, the Inclusive Framework released a package of technical and administrative guidance on the implementation of pillar two, including the scope of companies that will be subject to the Global Anti-Base Erosion Rules, transition rules, and guidance on domestic minimum taxes that countries may choose to adopt, among other topics.

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

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

On February 1, 2023, the US.

Financial Accounting Standards Board indicated that they believe the minimum tax imposed under pillar two is an alternative minimum tax, and, accordingly, deferred tax assets and liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period incurred.

On April 19, 2021, the Canadian federal government delivered its 2021 budget which contained proposed measures related to limitations on interest deductibility and changes in relation to international taxation.

Draft legislative proposals pertaining to interest deductibility were initially released for public comment on February 4, 2022, with revised legislative proposals subsequently released on November 3, 2022.

The proposed rules on interest deductibility are expected to be effective no earlier than January 1, 2024.

The proposed rules and their application are complex and could have a material adverse impact on our consolidated effective tax rate and financial results in future years if enacted as drafted.

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

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

On February 1, 2023, the U.S.

On October 8, 2021, the Organisation for Economic Co-operation and Development (“OECD”) published a statement that outlined the key components of a two-pillar plan to address the tax challenges arising from the digitalisation of the economy.

The statement was agreed by the OECD/G20 inclusive framework on Base Erosion and Profit Shifting (the “Inclusive Framework”) which now includes 145 member jurisdictions.

The timetable for implementation of the two-pillar plan was initially proposed for 2023, but has since been extended to 2024 and, with respect to certain components of the plan, 2025.

Under the pillar one proposals, a portion of the residual profits of multinational enterprise (“MNE”) groups with global turnover above €20 billion and a profit margin above 10% will be allocated to market jurisdictions where such allocated profits would be taxed.

Under pillar two proposals, a global minimum corporate tax rate of 15% will apply to undertaxed profits of MNE groups with consolidated revenue of at least €750 million.

On December 20, 2021, the OECD released model rules on the global minimum tax under pillar two, followed by the OECD’S commentaries, examples, three sets of administrative guidance and certain other documents relating to the operation and application of the model rules.

On December 18, 2023, the OECD announced plans to release additional guidance on model rules and to start the peer review process in 2024.

Many members of the Inclusive Framework have either introduced or announced their intention to introduce certain components of the global minimum tax in line with the model rules for fiscal year beginning on or after December 31, 2023.

In particular, on December 15, 2022, the Council of the European Union (“EU”) adopted a directive to require the implementation of the pillar two rules by EU member states, with certain elements becoming effective for fiscal years beginning on or after December 31, 2023.

On August 4, 2023, Canada released draft legislation to enact certain components of the pillar two proposals into Canadian law as the Global Minimum Tax Act (“GMTA”).

The GMTA is generally aligned with the model rules proposed by the OECD and is expected to become effective for fiscal years beginning on or after December 31, 2023.

The United States did not announce plans to enact the tax measures under the two-pillar plan.

On February 1, 2023, the US Financial Accounting Standards Board indicated that they believe the minimum tax imposed under pillar two by other jurisdictions is an alternative minimum tax, and, accordingly, deferred tax assets and liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period incurred.

We will continue to monitor the implementation of the two-pillar plan by the countries in which we operate, and to consider the impact of these measures.

jurisdictions in which the Company operates have adopted the global minimum tax provision of the OECD pillar two effective for tax years beginning in January 2024.

We currently do not expect the provisions of the Inclusive Framework, as currently adopted, to have a material impact on our liability for corporate taxes or our consolidated tax rate.

However, it is possible that the further implementation of the Inclusive Framework could have a material effect on our liability for corporate taxes or our consolidated tax rate in the future.

Health Care Reform

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Certain of our products face the expiration of their patent or regulatory exclusivity in 2024 or in later years, following which we anticipate generic competition of these products.

In addition, in certain cases, as a result of negotiated settlements of some of our patent infringement proceedings against generic competitors, we have granted licenses to such generic companies,

which will permit them to enter the market with their generic products prior to the expiration of our applicable patent or regulatory exclusivity.

In addition, in certain cases, as a result of negotiated settlements of some of our patent infringement proceedings against generic competitors, we have granted licenses to such generic companies, which will permit them to enter the market with their generic products prior to the expiration of our applicable patent or regulatory exclusivity.

Finally, for certain of our products that lost patent or regulatory exclusivity in prior years, we anticipate that generic competitors may launch in 2024 or in later years.

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however, even with launch of an authorized generic, the decline in product sales of such product would still be expected to be significant, and the effect on our future revenues could be material.

A number of our products already face generic competition.

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

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

2022 LOE Branded Products - Branded products that began facing generic competition in the U.S.

during 2022 included Lotemax ® Gel, Bepreve ® , Targretin ® Gel and Clindagel ® .

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

2024 through 2027 LOE Branded Products - Based on current patent expiration dates, settlement agreements and/or competitive information, we have identified branded products that we believe could begin facing potential LOE and/or generic competition in the U.S.

during the years 2024 through 2027.

These products and year of expected LOE include, but are not limited to, Aplenzin ® (2026), Bryhali ® (2026), Noritate ® (2023), Onexton ® (2023), Prolensa ® (2023) and Xerese ® (2023).

These products and year of expected LOE include, but are not limited to, Aplenzin ® (2026) and Bryhali ® (2026).

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

In addition, for a number of our products (including Xifaxan ® 550 mg, Arazlo ® , Colazal ® , Duobrii ® , Trulance ® , and Lumify ® in the U.S.

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

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

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

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Summary of 2023 Compared with 2022

Revenues for 2023 and 2022 were $8,757 million and $8,124 million, respectively, an increase of $633 million, or 8%.

The increase was primarily driven by growth in the Bausch + Lomb, Salix, International and Solta Medical segments driven by:

(i) higher volumes, (ii) improved net pricing and (iii) incremental sales attributable to acquisitions, partially offset by:

(i) the unfavorable impact of foreign currencies, primarily in Europe and Asia, (ii) lower revenues in our Diversified segment and (iii) the impact of divestitures and discontinuations.

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

Operating income was $963 million and $454 million for 2023 and 2022, respectively, and included non-cash charges for Depreciation and amortization of intangible assets of $1,264 million and $1,394 million, Asset impairments of $54 million and $15 million, Goodwill impairments of $493 million and $824 million and Share-based compensation of $132 million and $126 million, respectively.

The increase in our operating results of $509 million reflects, among other factors:

• an increase in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) of $435 million and was primarily driven by the increase in revenues as discussed above;

• an increase in Selling, general, and administrative expenses of $292 million, primarily attributable to higher compensation and higher selling, advertising and promotion expenses, including for XIIDRA, and certain administrative expenses;

• an increase in R&D of $75 million primarily attributable to higher spend on certain Salix projects;

• a decrease in Amortization of intangible assets of $138 million primarily attributable to fully amortized intangible assets no longer being amortized in 2023;

• a decrease in Goodwill impairments of $331 million.

In 2023, we recognized impairments aggregating $493 million to the goodwill of our Dermatology, Neurology and Generics reporting units, while in 2022, we recognized impairments aggregating $824 million to the goodwill of our Dermatology and Neurology businesses;

• an increase in Asset impairments of $39 million, primarily attributable to the launch of a generic competitor to our Uceris ® Foam product in 2023;

• a favorable change in Other expense, net of $7 million, primarily attributable to insurance recoveries in 2023, partially offset by:

(i) adjustments to reflect changes in estimates of the liability for Acquisition-related contingent consideration and (ii) Acquisition related transaction costs incurred in 2023.

Loss before income taxes for 2023 and 2022 was $390 million and $129 million, respectively, an increase in our loss of $261 million.

This increase is primarily attributable to:

(i) a decrease in Gain on extinguishment of debt of $874 million and (ii) the unfavorable net change in Foreign exchange and other of $44 million, partially offset by:

(i) the increase in our operating results of $509 million, as previously discussed, (ii) a decrease in Interest expense of $136 million and (iii) an increase in Interest income of $12 million.

The decrease in interest expense is primarily due to the impact of the accounting treatment for a portion of interest payments on the New Secured Notes, which reduced reported interest expense by $282 million relative to contractual interest cost.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements

and the section below titled “LIQUIDITY AND CAPITAL RESOURCES - Liquidity and Debt” for further details on the accounting for the Exchange Offer.

Net loss attributable to Bausch Health for 2023 and 2022 was $592 million and $225 million, respectively, an increase of $367 million.

The increase was primarily due to the increase in our Loss before income taxes of $261 million, as previously discussed, and the unfavorable change in our provision for income taxes of $138 million, partially offset by increase in Net loss (income) attributable to noncontrolling interest of $32 million.

Summary of 2022 Compared with 2021

Revenues for 2022 and 2021 were $8,124 million and $8,434 million, respectively, a decrease of $310 million, or 4%.

The decrease was primarily driven by:

(i) the unfavorable impact of foreign currencies, (ii) the impact of our divestiture of Amoun on July 26, 2021 and (iii) a decrease in volumes primarily attributable to our Diversified Products and Salix segments partially offset by the increase in volumes in our Bausch + Lomb and International segments.

(i) the unfavorable impact of foreign currencies, (ii) the impact of our divestiture of Amoun on July 26, 2021 and (iii) a decrease in volumes primarily attributable to our Diversified and Salix segments partially offset by the increase in volumes in our Bausch + Lomb and International segments.

These decreases were partially offset by an increase in net realized pricing, primarily in our Salix, Bausch + Lomb and International segments.

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

Operating income was $454 million and $450 million for 2022 and 2021, respectively, an increase in our operating results of $4 million which reflects, among other factors:

Operating income was $454 million and $450 million for 2022 and 2021, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $1,394 million and $1,552 million, Asset impairments, including loss on assets held for sale of $15 million and $234 million, Goodwill impairments of $824 million and $469 million and Share-based compensation of $126 million and $128 million for 2022 and 2021, respectively.

The increase in our operating results of $4 million reflects, among other factors:

• a decrease in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) of $271 million.

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(i) the unfavorable impact of foreign currencies, (ii) the impact of our divestiture of Amoun on July 26, 2021 and (iii) the decrease in volumes, as previously discussed, partially offset by the increase in net realized pricing;

• an increase in Selling, general, and administrative (“SG&A”) expenses of $1 million;

• an increase in Selling, general, and administrative expenses of $1 million;

• an increase in R&D of $64 million primarily attributable to lower R&D spend in 2021, as certain R&D activities and clinical trials which were suspended in response to the COVID-19 pandemic and did not normalize until later in 2021;

• a decrease in Amortization of intangible assets of $160 million primarily attributable to fully amortized intangible assets no longer being amortized in 2022;

• an increase in Goodwill impairments of $355 million as we recognized impairments of $824 million and $469 million for 2022 and 2021, respectively, associated with our Neurology and Other and Ortho Dermatologics reporting units;

• a decrease in Asset impairments, including loss on assets held for sale of $219 million, primarily attributable to adjustments to the loss on assets held for sale in connection with the Amoun Sale during 2021;

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(i) to higher adjustments related to the settlements of certain litigation matters during 2021 and (ii) the loss on the completion of the Amoun Sale 2021, partially offset by insurance recoveries related to certain litigation matters.

Our Loss before income taxes for 2022 and 2021 was $129 million and $1,024 million, respectively, a decrease in our loss of $895 million.

This was primarily attributable to:

(i) the favorable change in Gain (loss) on extinguishment of debt of $937 million primarily driven by the Exchange Offer and open market repurchases of senior notes and (ii) the increase in our

operating results of $4 million, partially offset by:

(i) the favorable change in Gain (loss) on extinguishment of debt of $937 million primarily driven by the Exchange Offer and open market repurchases of senior notes and (ii) the increase in our operating results of $4 million, partially offset by:

(i) an increase in Interest expense of $38 million and (ii) an unfavorable net change in Foreign exchange and other of $15 million.

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This was primarily due to the decrease in our Loss before income taxes of $895 million, as previously discussed, partially offset by the unfavorable change in our provision for income taxes of $170 million.

Summary of 2021 Compared with 2020

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

The increase was primarily driven by:

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

These increases were partially offset by:

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

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

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

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

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

The increase was primarily driven by:

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

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

• an increase in SG&A expenses of $257 million, primarily attributable to:

(i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, (ii) Separation-related and IPO-related costs incurred in 2021 and (iii) the impact of foreign currencies;

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

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

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

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

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

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

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

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

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

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

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

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

Net loss attributable to Bausch Health Companies Inc.

for 2021 and 2020 was $948 million and $560 million, respectively, an increase in our loss of $388 million.

This was primarily due to:

(i) a decrease in the Benefit from income taxes

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

RESULTS OF OPERATIONS

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Net loss (611) (212) (937) (399) 725

Net income attributable to noncontrolling interest (13) (11) (1) (2) (10)

Net loss (income) attributable to noncontrolling interest 19 (13) (11) 32 (2)

Net loss attributable to Bausch Health Companies Inc.

$ (592) $ (225) $ (948) $ (367) $ 723

A detailed discussion of the year-over-year changes of the Company’s 2021 results compared with that of 2020 can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations with Retrospective Segment Changes of the 2021 Form 10-K” in Exhibit 99.1 of our Form 8-K filed on May 10, 2022.

A detailed discussion of the year-over-year changes of the Company’s 2022 results compared with that of 2021 can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed on February 23, 2023.

2023 Compared with 2022

The Company’s revenues are primarily generated from product sales, principally in the therapeutic areas of GI, dermatology and eye health, that consist of:

The Company’s revenues are primarily generated from product sales, principally in the therapeutic areas of GI, neurology, dermatology and eye health, that consist of:

(i) branded pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii) OTC products and (iv) medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment and aesthetic medical devices).

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See Note 22, “SEGMENT INFORMATION” to our audited Consolidated Financial Statements for the disaggregation of revenues which depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by the economic factors of each category of customer contracts.

Our revenues were $8,124 million and $8,434 million for 2022 and 2021, respectively, a decrease of $310 million, or 4%.

The decrease was due to:

(i) the unfavorable impact of foreign currencies of $264 million primarily in Europe and Asia, (ii) the impact of divestitures and discontinuations of $178 million, primarily attributable to our divestiture of Amoun on July 26, 2021 and (iii) a decrease in volumes of $88 million primarily in our Diversified, Salix and Solta segments partially offset by an increase in volumes in our Bausch + Lomb and International segments.

These decreases were partially offset by an increase in net realized pricing of $220 million, primarily in our Salix, Bausch + Lomb and International segments.

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

Our revenues were $8,757 million and $8,124 million for 2023 and 2022, respectively, an increase of $633 million, or 8%.

The increase was due to:

(i) an increase in volumes of $335 million, in our Bausch + Lomb, Salix, Solta Medical and International segments partially offset by lower volumes in our Diversified segment, (ii) improved net pricing of $224 million across all our segments and (iii) incremental sales attributable to acquisitions of $141 million, partially offset by:

unfavorable impact of foreign currencies of $45 million primarily in Europe and Asia and (ii) the impact of divestitures and discontinuations of $22 million.

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

Cash Discounts and Allowances, Chargebacks and Distribution Fees

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In addition, some payor contracts require discounting if a price increase or series of price increases in a contract period exceeds a negotiated threshold.

Provision balances relating to amounts payable to direct customers are netted against trade receivables and balances relating to indirect customers are included in accrued liabilities.

Returns provision balances and volume discounts to direct customers are included in Accrued and other current liabilities.

All other provisions related to direct customers are included in Trade receivables, net, while provision balances related to indirect customers are included in Accrued and other current liabilities.

We actively manage these offerings, focusing on the incremental costs of our patient assistance programs, the level of discounting to non-retail accounts and identifying opportunities to minimize product returns.

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Net product sales $ 8,663 59.0 % $ 8,025 59.0 %

Discounts and allowances, returns, rebates, chargebacks and distribution service fees as a percentage of gross product sales were 40.9% and 39.4% in 2022 and 2021, respectively, an increase of 1.5% percentage points and includes:

• discounts and allowances as a percentage of gross product sales were lower primarily due to lower gross product sales for certain generic products such as Glumetza ® AG and Apriso ® AG and lower discount rates for certain other generic products, such as Uceris ® AG, Migranal ® AG and Elidel ® AG;

• returns as a percentage of gross product sales was unchanged as:

(i) the result of the Company’s improving return experience and (ii) the favorable year over year impact due to the recall of certain Bausch + Lomb consumer products as a result of a quality issue at a third-party supplier during the three months ended June 30, 2021, as discussed below, were offset by increases in our International segment of approximately $11 million during the three months ended June 30, 2022, to reflect a change in estimated future returns in one market, driven by lower estimated demand following the easing of local COVID-19 lockdown restrictions and a change of distributors.

Included in the product returns provision for 2022 and 2021 are reductions in variable consideration for sales returns related to past sales of approximately $21 million and $28 million, respectively.

Further, we estimate that a 1% change in our return experience would have impacted our pre-tax earnings by approximately $97 million for the year 2022.

See Note 2, “SIGNIFICANT ACCOUNTING POLICIES” to our audited Consolidated Financial Statements regarding further details related to product sales provisions;

• rebates as a percentage of gross product sales were higher primarily due the impact of an increase in gross product sales of certain branded products with higher rebate rates, such as Jublia ® , Xifaxan ® , Aplenzin ® and Trulance ® , partially offset by lower gross product sales and lower rebate rates for certain branded products such as Wellbutrin ® , Retin-A ® Microsphere .06% and Retin-A ® Microsphere .08%.

Discounts and allowances, returns, rebates, chargebacks and distribution service fees as a percentage of gross product sales were 41.0% in 2023 and 2022, in each period and includes:

• discounts and allowances as a percentage of gross product sales were unchanged;

• returns as a percentage of gross product sales were unchanged;

• rebates as a percentage of gross product sales were higher primarily due to the acquisition of XIIDRA ® by Bausch + Lomb, the impact of an increase in gross product sales and higher rebate rates for certain branded products such as Xifaxan ® , Trulance ® and Jublia ® , partially offset by lower gross product sales and lower rebate rates for certain branded products such as Wellbutrin ® , Retin-A ® Microsphere .06%, Retin-A ® and Microsphere .08%.

We estimate that a 1% change in our estimated rates used in determining the Medicaid rebate reserve would have impacted our pre-tax earnings by approximately $88 million for 2023;

• chargebacks as a percentage of gross product sales were higher primarily due the impact of an increase in gross product sales of certain branded products with higher chargeback rates for certain branded products such as Glumetza ® SLX, Xifaxan ® and Trulance ® , partially offset by lower gross product sales for certain generic products such as Glumetza ® AG, Apriso ® AG and Targretin ® AG and by lower chargeback rates and gross product sales for certain branded products such as Mysoline ® and Ativan ® ;

• distribution service fees as a percentage of gross product sales were higher primarily due to higher gross product sales of Xifaxan ® .

• chargebacks as a percentage of gross product sales were lower primarily due to lower gross product sales of certain generic products such as Apriso ® AG, Targretin ® AG, Syprine ® AG and Cuprimine ® AG.

These decreases were

partially offset by:

(i) increased gross product sales of our GI products Xifaxan ® and Glumetza ® SLX and (ii) higher chargeback rates for certain generics and branded generics;

• distribution service fees as a percentage of gross product sales were unchanged.

Price appreciation credits were $11 million and $10 million for 2023 and 2022, respectively.

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Cost of goods sold excludes the amortization and impairments of intangible assets.

Cost of goods sold was $2,336 million and $2,361 million for 2022 and 2021, respectively, a decrease of $25 million, or 1%.

The decrease was primarily driven by:

(i) the impact of the divestiture of Amoun on July 26, 2021 and (ii) the favorable impact of foreign currencies, partially offset by increase in volumes and higher manufacturing variances, driven by inflationary pressures related to certain manufacturing costs.

In 2021, Bausch + Lomb Incorporated (“B&L Inc.”) was notified by a third-party supplier of sterilization services for its lens care solution bottles and caps at its Milan, Italy facility, of inconsistencies in the sterilization data versus certificates of conformance previously submitted to B&L Inc.

by that supplier.

Based on B&L Inc.’s internal Health and Safety Analysis, it was determined that this issue did not affect the safety or performance of any of its products and was limited to a specific number of lots for certain Consumer products within our Bausch + Lomb segment.

However, out of an abundance of caution and working with the appropriate notified body and responsible health authorities, B&L Inc.

has contained and/or recalled down to the consumer level the limited number of affected lots of products resulting in $8 million of manufacturing variances and $6 million of returns.

Cost of goods sold as a percentage of Product sales revenue was 29.0% and 28.3% for 2022 and 2021, respectively, an increase of 0.7 percentage points primarily attributable to:

(i) higher manufacturing variances and (ii) year-over-year changes in product mix.

Cost of goods sold was $2,519 million and $2,316 million for 2023 and 2022, respectively, an increase of $203 million, or 9%.

The increase was primarily driven by:

(i) the increase in volumes as previously discussed, (ii) charges related to the Injector recall, as discussed below, and (iii) costs of sales associated with Bausch + Lomb’s acquisitions entered into in 2023, which includes the amortization of an interim contract and inventory step-up as part of the purchase accounting, partially offset by:

(i) favorable manufacturing variances and (ii) the favorable impact of foreign currencies.

In May 2023 we initiated a voluntary recall in EMEA and Canada of our Emerade epinephrine auto-injectors (0.3 mg and 0.5 mg) (the “Injector”) used to deliver an emergency treatment of epinephrine to patients who are at risk of serious allergic reactions (anaphylaxis).

The recall resulted in inventory provisions of approximately $9 million, product return provisions of approximately $2 million and other costs of approximately $3 million for 2023.

It is possible that additional charges may be incurred based on future developments associated with this voluntary recall.

Cost of goods sold as a percentage of Product sales revenue was 29.1% and 28.9% for 2023 and 2022, respectively, an increase of 0.2 percentage points primarily attributable to higher Cost of goods sold, as discussed above.

Selling, General and Administrative Expenses

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depreciation of corporate facilities and equipment;

separation-related and IPO-related costs;

and other general and administrative costs.

The Company has incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation and, for 2022 and 2021, has incurred costs associated with the suspended Solta IPO.

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

(i) IT infrastructure and software licensing costs, (ii) rebranding costs, (iii) costs associated with facility relocation and/or modification and (iv) costs to operating two public companies as a result of the B+L IPO.

SG&A expenses were $2,625 million and $2,624 million for 2022 and 2021, respectively, an increase of $1 million.

The increase was primarily attributable to:

(i) higher selling expenses, primarily related to freight and (ii) higher compensation expenses partially offset by:

(i) the favorable impact of foreign currencies, (ii) the impact of our divestiture of Amoun on July 26, 2021 and (iii) lower Separation-related and IPO-related costs.

The Company has incurred, and expects to continue to incur, incremental costs with respect to the B+L Separation.

During 2022, the Company also incurred incremental costs indirectly related to the suspended initial public offering of its aesthetic medical device business, Solta Medical (the “Solta IPO”).

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

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

SG&A expenses were $2,917 million and $2,625 million for 2023 and 2022, respectively, an increase of $292 million, or 11%.

The increase was primarily attributable to higher:

(i) compensation, (ii) selling, advertising and promotion expenses, including for XIIDRA and (iii) certain administrative expenses.

These increases were partially offset by:

(i) lower professional fees associated with the separation of certain functions in connection with the B+L Separation and (ii) the favorable impact of foreign currencies.

Research and Development Expenses

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R&D expenses were $604 million and $529 million for 2023 and 2022, respectively, an increase of $75 million, or 14%.

The increase was primarily attributable to:

(i) the result of lower R&D spend in early 2021 as certain R&D activities and clinical trials which were suspended in response to the COVID-19 pandemic and did not normalize until later in 2021, as previously discussed, and (ii) higher spend on certain Solta and Bausch + Lomb projects.

R&D expenses as a percentage of Product sales were approximately 7% and 6% for 2022 and 2021, respectively.

R&D expenses as a percentage of Product sales were approximately 7% for 2023 and 2022, in each period.

The increase was primarily attributable to higher spend on certain Salix projects, primarily our rifaximin SSD formulation, as previously discussed.

Amortization of Intangible Assets

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We estimate the fair values of our reporting units using a discounted cash flow model, which utilizes Level 3 unobservable inputs.

Goodwill impairments were $824 million and $469 million for 2022 and 2021, respectively.

Ortho Dermatologics

Goodwill impairments were $493 million and $824 million for 2023 and 2022, respectively, a decrease of $331 million, or 40%.

2023 Assessment

Dermatology and Neurology

Through the nine months ended September 30, 2023, the Dermatology and Neurology reporting units had performed largely in line with the forecasted results used in their long term forecasts prepared as of September 30, 2022 and October 1, 2022, respectively, when a fair value quantitative test for each of these reporting units was last performed.

During the third quarter of 2023, for reasons discussed in Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our audited Consolidated Financial Statements, the Company’s preliminary assessment of future business performance indicated that the future financial results of these reporting units were expected to be below the assumptions used in their last quantitative fair value tests.

After considering the limited headroom as a result of the impairment to goodwill of the Dermatology reporting unit (September 30, 2022) and the Neurology reporting unit (October 1, 2022) when last tested, the Company determined that these changes in facts and circumstances, as well as increases in market interest rates during the three months ended September 30, 2023, suggested that the fair values of these reporting units could be less than their respective carrying amounts, and therefore a quantitative fair value test for each of these reporting units was performed.

Based on the quantitative fair value tests, the carrying values of the Dermatology and Neurology reporting units exceeded their fair values at September 30, 2023 by $151 million and $251 million, respectively, and we recognized goodwill impairments of $402 million during the three months ended September 30, 2023.

The Generics reporting unit operates in the United States, where shifting market dynamics, including changes in payer demands, health care legislation, and other regulations are contributing to increasing pressure for the reduction of healthcare costs, through pricing of pharmaceutical products.

The Generics reporting unit’s product portfolio is by its nature impacted by these changing market dynamics.

As a result, the Company revised its long-term forecasts for the Generics reporting unit to reflect these developments.

The Company’s annual goodwill impairment test as of October 1, 2023, included performing a quantitative fair value test for the Generics reporting unit of our Diversified segment as discussed in Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our audited Consolidated Financial Statements.

Based on the quantitative fair value testing performed as of October 1, 2023, a $91 million impairment to the goodwill of the Generics reporting unit was recognized.

2022 Assessment

During the second quarter of 2022, increases in interest rates and, to a lesser extent, higher than expected inflation in the U.S.

and other macroeconomic factors impacted key assumptions used to value the Ortho Dermatologics reporting unit at March 31, 2022 (the last time goodwill of the Ortho Dermatologics reporting unit was tested).

As a result of these market conditions and given the reporting unit’s limited headroom, goodwill for our Ortho Dermatologics reporting unit was impaired

during the three month period ended June 30, 2022 reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as of June 30, 2022, an $83 million impairment to the goodwill of the Ortho Dermatologics reporting unit was recognized.

As a result, there was zero headroom in the Ortho Dermatologics reporting unit as of June 30, 2022.

During the third quarter of 2022, the Company continued to monitor the market conditions impacting the Ortho Dermatologics reporting unit.

and other macroeconomic factors impacted key assumptions used to value the Dermatology reporting unit at March 31,

2022 (the last time goodwill of the Dermatology reporting unit was tested).

As a result of these market conditions and given the reporting unit’s limited headroom, goodwill for our Dermatology reporting unit was impaired during the three month period ended June 30, 2022 reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as of June 30, 2022, an $83 million impairment to the goodwill of the Dermatology reporting unit was recognized.

As a result, there was zero headroom in the Dermatology reporting unit as of June 30, 2022.

During the third quarter of 2022, the Company continued to monitor the market conditions impacting the Dermatology reporting unit.

Continued increases in interest rates and, to a lesser extent, higher than expected inflation in the U.S.

and other macroeconomic factors impacted key assumptions used to value the Ortho Dermatologics reporting unit at June 30, 2022.

As a result of these market conditions and given there was no headroom as a result of the impairment to goodwill in the previous quarter, goodwill for our Ortho Dermatologics reporting unit was impaired during the three month period ended September 30, 2022, reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as of September 30, 2022, a $119 million impairment to the goodwill of the Ortho Dermatologics reporting unit was recognized.

Neurology and Other

The Neurology and Other reporting unit operates in the United States, where shifting market dynamics, including changes in payer demands (such as pharmaceutical market access and contractual pricing), health care legislation, and other regulations are contributing to increasing pressure for the reduction of healthcare costs, through both pricing of pharmaceutical products and/or directing patients to lower cost unbranded generic products.

and other macroeconomic factors impacted key assumptions used to value the Dermatology reporting unit at June 30, 2022.

As a result of these market conditions and given there was no headroom as a result of the impairment to goodwill in the previous quarter, goodwill for our Dermatology reporting unit was impaired during the three months period ended September 30, 2022, reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as of September 30, 2022, a $119 million impairment to the goodwill of the Dermatology reporting unit was recognized.

The Neurology reporting unit operates in the United States, where shifting market dynamics, including changes in payer demands (such as pharmaceutical market access and contractual pricing), health care legislation, and other regulations are contributing to increasing pressure for the reduction of healthcare costs, through both pricing of pharmaceutical products and/or directing patients to lower cost unbranded generic products.

This includes recent changes related to pharmaceutical pricing by the Federal government, including the passage of the IRA in August 2022 and, effective in 2024, changes to Medicaid rebate caps (passed as part of the American Rescue Plan Act of 2021).

The nature of the Neurology and Other reporting unit’s product portfolio, which includes branded generic pharmaceuticals, is by its nature more directly impacted by these changing market dynamics, creating increased pressure on the reporting unit’s long-term financial performance.

The nature of the Neurology reporting unit’s product portfolio, which includes branded generic pharmaceuticals, is by its nature more directly impacted by these changing market dynamics, creating increased pressure on the reporting unit’s long-term financial performance.

In response to these pressures, as well as to consider anticipated increased competition from new market entrants in 2023, during the fourth quarter of 2022, we began taking steps to:

(i) reassess our pricing strategies, (ii) re-evaluate our marketing and promotional efforts and (iii) reduce our cost structure and revised our long-term forecasts for the Neurology and Other reporting unit to reflect these developments.

As a result of the revisions to our long-term expectations for these changes and other factors, goodwill for our Neurology and Other reporting unit was impaired during our most recent annual impairment test reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as October 1, 2022, a $622 million impairment to the goodwill of the Neurology and Other reporting unit was recognized.

Ortho Dermatologics

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, increased insurance coverage pressures within the U.S.

were limiting patient access to topical acne and psoriasis products.

In response to these developments, during the first quarter of 2021, we began taking steps to:

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

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

As a result of these and other factors, goodwill for our Ortho Dermatologics reporting unit was impaired during the three month period ended March 31, 2021 reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as of March 31, 2021, a $469 million impairment to the goodwill of the Ortho Dermatologics reporting unit was recognized.

As a result of the revisions to our long-term expectations for these changes and other factors, goodwill for our Neurology reporting unit was impaired during our 2022 annual impairment test reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as of October 1, 2022, a $622 million impairment to the goodwill of the Neurology reporting unit was recognized.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our audited Consolidated Financial Statements and “CRITICAL ACCOUNTING POLICIES AND ESTIMATES — Goodwill” for further details related to our goodwill.

Asset impairments, including loss on assets held for sale

Asset impairments

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.

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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 were $15 million and $234 million for 2022 and 2021, respectively, a decrease of $219 million.

Asset impairments were $54 million and $15 million for 2023 and 2022, respectively, an increase of $39 million.

Asset impairments for 2023 includes:

(i) $37 million related to the impairment to the intangible assets associated with our Uceris ® Foam product as discussed below, (ii) impairments of $8 million, in aggregate, attributable to certain trade names no longer in use and (iii) impairments of $9 million, in aggregate related to the discontinuance of certain product lines.

Uceris ® Foam - On April 12, 2023, the FDA approved an ANDA submitted by a competitor, for a budesonide (a steroid (cortisone-like) medicine) foam to help treat mild to moderate active ulcerative colitis.

This product is a generic version of our Uceris ® Foam product.

As of June 30, 2023, the carrying value of the Uceris ® Foam product related intangible assets exceeded the undiscounted expected cash flows from the Uceris ® Foam.

As a result, the Company recognized an impairment of $37 million to reduce the carrying value of the Uceris ® Foam product related intangible assets to their estimated fair value.

Asset impairments, including loss on assets held for sale for 2022 includes:

(i) impairments of $10 million, in aggregate, due to decreases in forecasted sales of certain product lines and (ii) impairments of $5 million, in aggregate, related to the discontinuance of certain product lines.

Asset impairments, including loss on assets held for sale for 2021 includes:

(i) impairments of $105 million, in aggregate, due to decreases in forecasted sales of certain product lines, (ii) an $88 million loss on assets held for sale in connection with the Amoun Sale, (iii) impairments of $23 million, in aggregate, related to the discontinuance of certain product lines and (iv) $18 million related to a portion of an IT infrastructure improvement project no longer being utilized

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our audited Consolidated Financial Statements for further details related to our intangible assets.

Restructuring, Integration, Separation and IPO Costs

Restructuring, integration, separation and IPO costs were $63 million and $50 million for 2022 and 2021, respectively, an increase of $13 million.

Restructuring, integration, separation and IPO costs were $62 million and $63 million for 2023 and 2022, respectively, a decrease of $1 million.

Restructuring and integration costs

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The Company has incurred, and expects to continue to incur costs associated with activities relating to the B+L Separation.

The Company also incurred costs associated with activities relating to the Solta IPO, which was suspended in June 2022.

In 2022, the Company also incurred costs associated with activities relating to the Solta IPO, which was suspended in June 2022.

These B+L Separation and Solta IPO activities include:

(i) separating the Bausch + Lomb and Solta Medical businesses from the remainder of the Company, (ii) completing the B+L IPO and preparing for the suspended Solta IPO and (iii) the actions necessary for Bausch + Lomb to become an independent publicly traded entity.

Separation and IPO costs are incremental costs directly related to the ongoing B+L Separation and the suspended 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.

(i) separating the Bausch + Lomb and, in 2022, Solta Medical businesses from the remainder of the Company, (ii) completing the B+L IPO and, in 2022, preparing for the suspended Solta IPO and (iii) the actions necessary for Bausch + Lomb to become an independent publicly traded entity.

Separation and IPO costs are incremental costs directly related to the ongoing B+L Separation and, in 2022, the suspended 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 Bausch + Lomb.

Separation and IPO costs were $4 million and $33 million for 2023 and 2022, respectively.

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Acquisition-related contingent consideration 59 29

Acquisition-related transaction costs 24 —

Other, net 1 1

Other expense, net $ 28 $ 35

Litigation and other matters for 2021, includes adjustments related to the Glumetza Antitrust Litigation, partially offset by insurance recoveries of $213 million related to certain litigation matters.

See Note 20, “LEGAL PROCEEDINGS” to our audited Consolidated Financial Statements for further details regarding these matters

Acquired in-process research and development costs primarily consists of costs associated with the upfront payments to enter into certain exclusive licensing agreements.

Litigation and other matters primarily related to insurance recoveries regarding certain litigation matters, Acquisition-related contingent consideration reflects adjustments for changes in estimates in the timing and amounts of the future royalty and milestone payments related to certain branded products and Acquisition-related transaction costs primarily related to transaction costs attributable to the acquisition of XIIDRA ® by Bausch + Lomb.

Non-Operating Income and Expense

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Interest expense primarily consists of interest payments due, amortization and write-off of debt discounts, premiums and debt issuance costs under our credit facilities and notes as well as the amortization of amounts excluded from the assessment of hedge effectiveness over the term of the Company’s cross-currency swaps.

In November 2021, we entered into a transaction to unwind our cross-currency swaps.

In July 2022, Bausch + Lomb entered into new cross-currency swaps with aggregate notional amounts of $1,000 million.

Following the completion of the debt exchange in September 2022, interest payments on certain of our debt will not be classified as interest expense but rather will be a reduction in premium recorded at the time of the debt exchange.

Interest expense was $1,328 million and $1,464 million and included non-cash amortization and write-offs of debt discounts, premiums and debt issuance costs of $65 million and $99 million for 2023 and 2022, respectively.

Interest expense increased $38 million, or 3%, in 2022 as compared to 2021, primarily attributable to higher write-offs of debt issuance costs in 2022 as well as higher interest rates partially offset by the impact of lower outstanding debt balances and the impact of the accounting treatment for the New Secured Notes, which resulted in lower interest expense of $74 million in the fourth quarter of 2022 as compared to the stated rate of interest on the New Secured Notes.

Interest expense decreased $136 million, or 9%, in 2023 as compared to 2022, primarily due to the accounting for contractual interest payments on the New Secured Notes, portions of which are recorded as a reduction of related premiums and not as interest expense, which had the impact of reducing interest expense by $282 million relative to contractual interest cost.

This decrease was partially offset by higher interest rates.

The weighted average stated rate of interest as of December 31, 2023 and 2022 was 8.05% and 7.74%, respectively.

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See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details.

Gain (Loss) on Extinguishment of Debt

Gain (loss) on extinguishment of debt represents the differences between the amounts paid to settle extinguished debts and the carrying value of the related extinguished debt.

The gain on extinguishment of debt was $875 million for 2022, as compared to loss on extinguishment of debt of $62 million for 2021, primarily associated with certain refinancing transactions that occurred each year and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Focus on Core Business” for additional information regarding our gain on extinguishment of debt.

Gain on Extinguishment of Debt

Gain on extinguishment of debt represents the differences between the amounts paid to settle extinguished debts and the carrying value of the related extinguished debt.

Gain on extinguishment of debt was approximately $1 million and $875 million in 2023 and 2022, respectively, primarily associated with certain refinancing transactions and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Focus on Value and Core Businesses” for additional information regarding our gain on extinguishment of debt.

During December 2023, through a series of transactions we repurchased and retired outstanding senior unsecured notes with an aggregate par value of $8 million in the open market for approximately $7 million using cash on hand.

The gain on extinguishment of debt for 2022 includes:

(i) the gain associated with the Exchange Offer of $570 million and (ii) the gains associated with the early retirement of certain senior unsecured notes of $369 million discussed below, partially offset by $64 million of losses associated with the refinancing and modification to certain debt obligations completed in connection with the B+L IPO, each as discussed in further detail below, under “— Liquidity and Capital Resources — Liquidity and Debt”.

During June 2022 and December 2022, through a series of transactions we repurchased and retired, outstanding senior notes with an aggregate par value of $927 million in the open market, for approximately $550 million using:

During 2022, through a series of transactions we repurchased and retired outstanding senior unsecured notes with an aggregate par value of $927 million in the open market for approximately $550 million using:

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As a result of these transactions, we recognized a gain on the extinguishment of debt of approximately $369 million.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Focus on Core Businesses — Exchange Offer" for details of maturities and principal balances debt obligations.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Focus on Value and Core Businesses — September 2022 Exchange Offer” for details of maturities and principal balances debt obligations.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details.

Foreign Exchange and Other

Foreign exchange and other was a loss of $8 million and a gain of $7 million for 2022 and 2021, respectively, an unfavorable net change of $15 million primarily due to:

(i) translation gains/losses on intercompany loans and third-party liabilities and (ii) the gain/loss due to foreign currency exchange contracts.

Foreign exchange and other was a loss of $52 million and $8 million for 2023 and 2022, respectively, an unfavorable net change of $44 million primarily due to:

(i) transaction gains/losses on intercompany balances and third-party liabilities and (ii) the gain/loss due to foreign currency exchange contracts.

Income taxes are accounted for under the liability method.

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Deferred tax assets for outside basis differences in investments in subsidiaries are only recognized if the difference will be realized in the foreseeable future.

Provision for income taxes was $83 million in 2022 and benefit from income taxes was $87 million in 2021, an unfavorable net change of $170 million, primarily attributable to changes in our jurisdictional mix of earnings.

In 2022, the Company’s valuation allowance decreased $199 million primarily attributable to the impact of book taxable income in Canada and the expiration of tax losses in the United States.

Provision for income taxes was $221 million and $83 million in 2023 and 2022, respectively, an unfavorable net change of $138 million, primarily attributable to changes in our jurisdictional mix of earnings.

In 2023, the Company’s valuation allowance increased $231 million primarily due to book taxable loss in Canada and an increase for state tax losses expected to be unusable in the United States.

Our consolidated foreign rate differential reflects the net total tax cost or benefit on income earned or losses incurred in jurisdictions outside of Canada as compared to the net total tax cost or benefit of such income (on a jurisdictional basis) at the Canadian statutory rate of 26.9%.

Tax costs below the Canadian statutory rate generate a beneficial foreign rate differential as do tax benefits generated in jurisdictions where the statutory tax rate exceeds the Canadian statutory tax rate.

The net total foreign rate differentials generated in each jurisdiction in which we operate is not expected to bear a direct relationship to the net total amount of foreign income (or loss) earned outside of Canada.

The net total

foreign rate differentials generated in each jurisdiction in which we operate is not expected to bear a direct relationship to the net total amount of foreign income (or loss) earned outside of Canada.

In 2023 and 2022, our effective tax rate differs from the statutory Canadian income tax rate primarily due to:

(i) the recording of valuation allowance on entities for which no tax benefit of losses is recorded, (ii) changes in uncertain tax positions, (iii) changes in tax attributes, (iv) the tax provision generated from our mix of earnings by jurisdiction, (v) impairment to goodwill which is non-deductible under tax laws and (vi) changes in the valuation allowance related to foreign tax credits and net operating losses.

(i) the recording of valuation allowances on entities for which no tax benefit of losses is recorded, (ii) impairment to goodwill which is non-deductible under tax laws, (iii) changes in tax attributes, (iv) the tax provision generated from our mix of earnings by jurisdiction, (v) changes in uncertain tax positions and (vi) changes in the valuation allowance related to foreign tax credits and net operating losses.

We record a valuation allowance against our deferred tax assets to reduce their net carrying value to an amount that we believe is more likely than not to be realized.

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When we establish/increase or reduce/decrease the valuation allowance, the provision for income taxes will increase or decrease, respectively, in the period such determination is made.

Our valuation allowance against deferred tax assets as of December 31, 2022 and 2021 was $2,023 million and $2,222 million, respectively, a decrease of $199 million, as discussed above.

Our valuation allowance against deferred tax assets as of December 31, 2023 and 2022 was $2,254 million and $2,023 million, respectively, an increase of $231 million, as discussed above.

See Note 17, “INCOME TAXES” to our audited Consolidated Financial Statements for further details.

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Our portfolio of products falls into five reportable segments:

(i) Salix, (ii) International, (iii) Solta Medical, (iv) Diversified Products and (v) Bausch + Lomb.

(i) Salix, (ii) International, (iii) Solta Medical, (iv) Diversified and (v) Bausch + Lomb.

The following is a brief description of our segments:

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of GI products.

Sales of the Xifaxan ® product line represented 80% of the Salix segment’s revenues.

• The Solta Medical segment consists of global sales of Solta Medical (“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, (iii) Ortho Dermatologics (dermatological products) and (iv) dentistry products.

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

Sales of the Xifaxan ® product line represented approximately 80% of Salix segment revenues.

• The Solta Medical segment consists of global sales of Solta Medical aesthetic medical devices.

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

(i) pharmaceutical products in the areas of neurology and certain other therapeutic classes, (ii) dermatology products, (iii) generic pharmaceutical products and (iv) dentistry products.

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

Segment profit is based on operating income after the elimination of intercompany transactions.

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Solta Medical 347 4 % 300 4 % 47 16 %

Diversified Products 978 12 % 1,121 13 % (143) (13) %

Diversified 943 11 % 978 12 % (35) (4) %

Bausch + Lomb 4,146 47 % 3,768 46 % 378 10 %

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Solta Medical 161 46 % 135 45 % 26 19 %

Diversified Products 612 63 % 722 64 % (110) (15) %

Diversified 586 62 % 612 63 % (26) (4) %

Bausch + Lomb 980 24 % 874 23 % 106 12 %

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In order to present period-over-period organic revenue (non-GAAP) growth/change on a comparable basis, revenues associated with acquisitions, divestitures and discontinuations are adjusted to include only revenues from those businesses and assets owned during both periods.

Accordingly, organic revenue and organic growth/change exclude from the current period, revenues attributable to each acquisition for twelve months subsequent to the

day of acquisition, as there are no revenues from those businesses and assets included in the comparable prior period.

Accordingly, organic revenue and organic growth/change exclude from the current period, revenues attributable to each acquisition for twelve months subsequent to the day of acquisition, as there are no revenues from those businesses and assets included in the comparable prior period.

Organic revenue and change in organic revenue exclude from the prior period, all revenues attributable to each divestiture and discontinuance during the twelve months prior to the day of divestiture or discontinuance, as there are no revenues from those businesses and assets included in the comparable current period.

Revenues attributable to acquisitions completed in 2022 were less than $1 million during 2022.

The following table presents a reconciliation of GAAP revenues to organic revenues (non-GAAP) and presents organic revenue (Non-GAAP) and the year over year changes in organic revenue (Non-GAAP) for 2023 and 2022 by segment.

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Organic Revenue (Non-GAAP)

Reported Changes in Exchange Rates Organic Revenue (Non-GAAP) Revenue

Reported Divestitures and Discontinuations Organic Revenue (Non-GAAP)

Reported Changes in Exchange Rates Acquisitions Organic Revenue (Non-GAAP) Revenue

Reported Divestitures

and Discontinuations Organic Revenue (Non-GAAP)

(in millions) Amount Pct.

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Solta Medical 347 8 — 355 300 — 300 55 18 %

Diversified Products 978 — 978 1,121 (1) 1,120 (142) (13) %

Diversified 943 — — 943 978 (2) 976 (33) (3) %

Bausch + Lomb 4,146 68 (141) 4,073 3,768 (10) 3,758 315 8 %

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Salix Segment Revenue

The Salix segment includes the Xifaxan ® product line, which accounted for approximately 81% and 79% of the Salix segment revenues and approximately 21% and 19% of the Company’s revenues for 2022 and 2021, respectively.

The Salix segment includes the Xifaxan ® product line, which accounted for approximately 80% of the Salix segment revenues and approximately 21% of the Company’s revenues for 2023 and 2022.

No other single product group represents 10% or more of the Salix segment revenues.

The Salix segment revenue was $2,250 million and $2,090 million for 2023 and 2022, respectively, an increase of $160 million, or 8%.

The increase was primarily attributable to increases in net realized pricing of $95 million, primarily attributable to our Xifaxan ® product line partially offset by a decrease in volumes of $79 million, primarily attributable to:

(i) unfavorable inventory balancing of Xifaxan ® by certain wholesalers and (ii) the impact of generic competition for certain other products as they have lost exclusivity.

The increase was primarily attributable to:

(i) an increase in volumes of $107 million, which reflected growth and underlying demand as well as the impact of a benefit in the second half of 2023 from wholesaler stocking patterns associated with certain products including Xifaxan ® and (ii) an increase in net realized pricing of $53 million.

Salix Segment Profit

The Salix segment profit was $1,489 million and $1,493 million for 2022 and 2021, respectively, a decrease of $4 million.

The decrease was primarily driven by higher selling, advertising and promotion expenses primarily associated with Xifaxan ® , partially offset by lower litigation costs and the increase in revenue, as previously discussed.

The Salix segment profit was $1,548 million and $1,489 million for 2023 and 2022, respectively, an increase of $59 million, or 4%.

The increase was primarily driven by the increase in contribution attributable to the increase in revenues, as previously discussed, partially offset by higher:

(i) advertising and promotion and selling expenses, primarily due to increased Xifaxan ® investments and (ii) R&D expenses, including for our global RED-C program.

International Segment:

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The International segment has a diversified product line with no single product group representing 10% or more of its product sales.

The International segment revenue was $988 million and $1,166 million for 2022 and 2021, respectively, a decrease of $178 million, or 15%.

The decrease was primarily attributable to:

(i) the impact of divestitures and discontinuations of $167 million, primarily attributable to our divestiture of Amoun on July 26, 2021 and (ii) the unfavorable impact of foreign currencies of $65 million, primarily in Europe and Canada.

The decreases were partially offset by:

(i) an increase in net realized pricing of $30 million and (ii) an increase in volumes of $24 million.

The increase in volumes is primarily attributable to Europe and was partially offset by charges for approximately $15 million of returns in connection with a change in certain distribution agreements representing a change in estimated future returns in one market, driven by lower estimated demand following the easing of local COVID-19 lockdown restrictions as well as a change of distributors, as previously discussed.

The International segment revenue was $1,071 million and $988 million for 2023 and 2022, respectively, an increase of $83 million, or 8%.

The increase was primarily attributable to:

(i) an increase in net realized pricing of $47 million, (ii) the favorable impact of foreign currencies of $31 million, primarily in Latin America and Europe and (iii) an increase in volumes of $15 million, partially offset by the impact of divestitures and discontinuations of $10 million.

Revenues for 2022, also reflect charges of $13 million representing a change in estimated future returns in one market, driven by lower estimated demand following the easing of local COVID-19 lockdown restrictions as well as a change in distributors.

International Segment Profit

The International segment profit for 2022 and 2021 was $324 million and $403 million, respectively, a decrease of $79 million, or 20%.

The decrease was primarily driven by the decrease in contribution primarily attributable to:

(i) our divestiture of Amoun on July 26, 2021 and (ii) the unfavorable impact of foreign currencies, partially offset by an increase in net realized pricing and higher volumes.

The International segment profit for 2023 and 2022 was $335 million and $324 million, respectively, an increase of $11 million, or 3%.

The increase was primarily due to:

(i) the favorable impact of manufacturing variances and (ii) the favorable impact of foreign currencies, partially offset by the increase in selling expenses and advertising and promotion expenses.

Solta Medical Segment:

Solta Medical Segment Revenue

The Solta Medical segment includes the Thermage ® product lines, which accounted for approximately 77% of the Solta segment revenues for 2022, respectively.

No other single product group represents 10% or more of the Solta segment revenues.

The Solta segment revenue was $300 million and $308 million for 2022 and 2021, respectively, a decrease of $8 million, or 3%.

The decrease was primarily attributable to:

(i) a net decrease in volume of $16 million primarily driven by the impact of the government enforced COVID-19 pandemic related shutdowns in China, as previously discussed, partially offset by increases in volumes in other Asia Pacific countries and (ii) the unfavorable impact of foreign currencies of $15 million, partially offset by an increase in net realized pricing of $23 million.

The Solta Medical segment includes the Thermage ® product lines, which accounted for approximately 82% and 77% of the Solta Medical segment revenues for 2023 and 2022, respectively.

No other single product group represents 10% or more of the Solta Medical segment revenues.

The Solta Medical segment revenue was $347 million and $300 million for 2023 and 2022, respectively, an increase of $47 million, or 16%.

The increase was primarily attributable to:

(i) an increase in volumes of $50 million and (ii) increase in net realized pricing of $5 million, partially offset by the unfavorable impact of foreign currencies of $8 million.

Solta Medical Segment Profit

The Solta Medical segment profit was $135 million and $167 million for 2022 and 2021, respectively, a decrease of $32 million, or 19%.

The decrease is primarily attributable to an increase in R&D and the unfavorable impact of foreign currencies.

Diversified Products Segment:

Diversified Products Segment Revenue

The Diversified Products segment revenue was $978 million and $1,121 million for 2022 and 2021, respectively, a decrease of $143 million, or 13%.

The Solta Medical segment profit was $161 million and $135 million for 2023 and 2022, respectively, an increase of $26 million, or 19%.

The increase was primarily attributable to an increase in contribution due to increase in revenues, as previously discussed, partially offset by:

(i) the unfavorable impact of foreign currencies and (ii) higher selling, advertising and promotion expenses.

Diversified Segment:

Diversified Segment Revenue

The Diversified segment revenue was $943 million and $978 million for 2023 and 2022, respectively, a decrease of $35 million, or 4%.

The decrease was primarily driven by:

(i) a decrease in volume of $131 million and (ii) a decrease in net realized pricing of $11 million.

The decrease in volumes was primarily attributable to our Neurology and Other and Generics businesses due to:

(i) decreases in several products attributable to the non-recurring pandemic related government mail order programs in 2021 and (ii) the impacts of more generic competitors.

Diversified Products Segment Profit

The Diversified Products segment profit was $612 million and $722 million for 2022 and 2021, respectively, a decrease of $110 million, or 15% and was primarily driven by the decrease in revenues, as previously discussed.

(i) a decrease in volumes of $42 million, primarily in our Neurology and Dermatology businesses and (ii) the impact of divestitures and discontinuations of $2 million, partially offset by an increase in net realized pricing of $9 million, primarily in our Neurology businesses.

Diversified Segment Profit

The Diversified segment profit was $586 million and $612 million for 2023 and 2022, respectively, a decrease of $26 million, or 4% and was primarily driven by lower contribution attributable to the net decrease in revenues, as previously discussed, partially offset by lower:

(i) selling, general and administrative expenses and (ii) R&D.

Bausch + Lomb Segment:

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The Bausch + Lomb segment has a diversified product line with no single product group representing 10% or more of its segment revenues.

The Bausch + Lomb segment revenue was $3,768 million and $3,765 million for 2022 and 2021, respectively, an increase of $3 million.

The Bausch + Lomb segment revenue was $4,146 million and $3,768 million for 2023 and 2022, respectively, an increase of $378 million, or 10%.

The increase was primarily attributable to:

(i) increase in volumes of $114 million and net realized pricing of $83 million, partially offset by:

(i) the unfavorable impact of foreign currencies across all of Bausch + Lomb international businesses of $184 million, primarily in Europe and Asia and (ii) the impact of divestitures and discontinuations of $10 million, related to the discontinuation of certain products.

The increase in volumes was primarily driven by:

(i) the consumer eye care business, driven by:

(a) increased demand for Lumify ® , Biotrue ®, PreserVision ® and Ocuvite ® , (b) the non-recurrence of a third-party supplier quality issue on the prior year revenues of certain consumer eye care products, as discussed below, (ii) increased demand of consumables and intraocular lenses within the Surgical business and (iii) increased demand and new launches within the Ophthalmic Pharmaceuticals business.

These increases in volumes and pricing were partially offset by:

(i) the impact of the COVID-19 pandemic on the consumer and contact lens businesses in China and (ii) a claw-back related to the Ministerial Decree (“DM”) certifying a spending ceiling for the Italian National Health Fund for the years 2015-2018.

(i) an increase in volumes of $205 million across each of the Bausch + Lomb businesses, (ii) incremental sales attributable to acquisitions of $141 million, primarily related to the Pharmaceuticals and Vision Care businesses and (iii) an increase in net realized pricing of $110 million, primarily driven by the Vision Care business, partially offset by:

(i) the unfavorable impact of foreign currencies across all of Bausch + Lomb’s international businesses of $68 million, primarily in Europe and Asia and (ii) the impact of divestitures and discontinuations of $10 million, related to the discontinuation of certain products within the Surgical and Vision Care businesses.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit was $874 million and $958 million for 2022 and 2021, respectively, a decrease of $84 million, or 9%.

The decrease was primarily driven by:

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

These decreases were partially offset by the increase in revenues, as previously discussed.

The Bausch + Lomb segment profit was $980 million and $874 million for 2023 and 2022, respectively, an increase of $106 million, or 12%.

The increase was primarily attributable to the increase in contribution, driven by the increase in revenues, as previously discussed, partially offset by higher selling expenses and advertising and promotional expenses primarily related to XIIDRA ® and the launch of MIEBO ® .

LIQUIDITY AND CAPITAL RESOURCES

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Adjustments to reconcile Net loss to net cash provided by operating activities 2,225 (120) 2,491 2,345 (2,611)

Cash (used in) provided by operating activities before changes in operating assets and liabilities (332) 1,554 1,477 (1,886) 77

Cash provided by (used in) operating activities before changes in operating assets and liabilities 1,614 (332) 1,554 1,946 (1,886)

Changes in operating assets and liabilities (582) (396) (128) (186) (268)

Net cash (used in) provided by operating activities (728) 1,426 1,111 (2,154) 315

Net cash provided by (used in) operating activities 1,032 (728) 1,426 1,760 (2,154)

Net cash (used in) provided by investing activities (2,145) (303) 409 (1,842) (712)

Net cash used in financing activities (474) (1,513) (2,294) 1,039 781

Net cash provided by (used in) financing activities 1,475 (474) (1,513) 1,949 1,039

Effect of exchange rate changes on cash and cash equivalents 9 (23) (19) 32 (4)

Net (decrease) increase in cash, cash equivalents, restricted cash and other settlement deposits (1,528) 303 (1,428) (1,831) 1,731

Net increase (decrease) in cash, cash equivalents, restricted cash and other settlement deposits 371 (1,528) 303 1,899 (1,831)

Cash, cash equivalents, restricted cash and other settlement deposits, beginning of period 591 2,119 1,816 (1,528) 303

Cash, cash equivalents, restricted cash and other settlement deposits, end of period $ 962 $ 591 $ 2,119 $ 371 $ (1,528)

Operating Activities

Net cash used in operating activities was $728 million in 2022 as compared to Net cash provided by operating activities of $1,426 million in 2021, a decrease of $2,154 million.

The decrease was attributable to:

(i) the decrease in Cash provided by operating activities before changes in operating assets and liabilities and (ii) Changes in operating assets and liabilities.

Cash used in operating activities before changes in operating assets and liabilities in 2022 was $332 million as compared to Cash provided by operating activities before changes in operating assets and liabilities in 2021 of $1,554 million, a decrease of $1,886 million.

The decrease is primarily attributable to:

(i) payments of $1,572 million of accrued legal settlements related to the Securities Class Action Settlement, the Glumetza Antitrust Litigation and a RICO class action matter paid during 2022, (ii) changes in business performance, (iii) the impact of our divestiture of Amoun on July 26, 2021 and (iv) an increase in payments for separation costs, separation-related costs, IPO costs and IPO-related costs in 2022 as compared to 2021.

As of December 31, 2021, Restricted cash and other settlement deposits included $1,210 million of payments into an escrow fund under the terms of Securities Class Action Settlement which was subject to one objector’s appeal of the final court approval of the agreement.

The period to file a petition for an appeal with the U.S.

Supreme Court expired on August 10, 2022 and the objector did not file such a petition.

The expiration of this deadline means the Securities Class Action Settlement has become “final”, as no more appeals can be filed.

As a result, the Company’s rights in the funds previously paid into the escrow account were extinguished in accordance with the terms of the Securities Class Action Settlement.

As of December 31, 2021, Restricted cash and other settlement deposits also included $300 million of payments into escrow funds under the terms of settlement in the Glumetza Antitrust Litigation.

On February 3, 2022 the court granted final approval of the class settlement and ordered dismissal of the class plaintiff’s claims.

The deadline to appeal the final approval of the class settlement has now passed.

See Note 20, “LEGAL PROCEEDINGS” to our audited Consolidated Financial Statements for further details.

Net cash provided by operating activities was $1,032 million in 2023, as compared to net cash used in operating activities of $728 million in 2022, an increase of $1,760 million.

The increase was attributable to the increase in Cash provided by operating activities before changes in operating assets and liabilities, partially offset by the reduction in cash from Changes in operating assets and liabilities.

Cash provided by operating activities before changes in operating assets and liabilities was $1,614 million in 2023, as compared to cash used in operating activities before changes in operating assets and liabilities of $332 million in 2022, an increase of $1,946 million.

The increase is primarily attributable to:

(i) a decrease in payments of $1,572 million of accrued legal settlements related to the Securities Class Action Settlement, the Glumetza Antitrust Litigation and a RICO class action matter paid during 2022, (ii) insurance recoveries regarding certain legacy litigation matters received in 2023, (iii) changes in business performance and (iv) lower payments of interest included in Operating activities as, due to the accounting treatment for the Exchange Offer, the portion of contractual interest payments on the New Secured Notes which reduce the premium on the New Secured Notes is reported as a Financing activity.

During 2023, contractual interest payments on the New Secured Notes allocated to the reduction of the recorded premium were $282 million and are included in Cash flows from financing activities.

Changes in operating assets and liabilities resulted in a net decrease in cash of $582 million and $396 million in 2023 and 2022, respectively, an unfavorable change of $186 million.

During 2023, Changes in operating assets and liabilities were negatively impacted by:

(i) an increase in inventories of $322 million, (ii) the timing of other payments in the ordinary course of business of $223 million and (iii) an increase in trade receivables of $195 million, partially offset by an increase in Accounts payable, accrued and other liabilities of $158 million.

During 2022, Changes in operating assets and liabilities was negatively impacted by:

(i) an increase in inventories of $198 million, (ii) increase in Accounts payable, accrued and other liabilities of $75 million, (iii) the timing of other payments in the ordinary course of business of $66 million, driven in part by the impact of the interest payments made on September 30, 2022 associated with the notes tendered in the Exchange Offer and (iv) increase in trade receivables of $57 million.

During 2021, Changes in operating assets and liabilities was negatively impacted by:

(i) the increase in trade receivables of $229 million, (ii) an increase in inventories of $16 million and (iii) lower interest payable due to the timing of payments of $13 million, partially offset by the positive impact of the timing of other payments in the ordinary course of business of $130 million.

Investing Activities

Net cash used in investing activities was $2,145 million in 2023 and was primarily driven by payments of $1,890 million related to the XIIDRA Acquisition, the acquisition of the Blink ® Product Line and the acquisition of AcuFocus, each as previously discussed, and purchases of property, plant and equipment of $215 million.

Net cash used in investing activities was $303 million in 2022 and was primarily driven by Purchases of property, plant and equipment of $218 million.

Net cash provided by investing activities was $409 million in 2021 and was primarily driven by:

(i) Proceeds from sale of assets and businesses, net of costs to sell of $669 million, which is primarily attributable to the Amoun Sale and (ii) Settlements from cross-currency swaps of $27 million, partially offset by Purchases of property, plant and equipment of $269 million.

Financing Activities

Net cash provided by financing activities during 2023 was $1,475 million and was primarily driven by the issuance of long-term debt, net of discounts of $3,291 million and includes:

(i) $1,866 million in net proceeds from the B+L October 2028 Secured Notes and B+L September 2028 Term Loan B Facility, a portion of which was used to finance the XIIDRA Acquisition as discussed below, (ii) $665 million of borrowings under the 2027 Revolving Credit Facility, (iii) $350 million of borrowings under the AR Credit Facility and (iv) $410 million in borrowings under the B+L Revolving Credit Facility, partially offset by the repayments of long-term debt of $1,710 million and includes:

(i) $1,270 million of amounts outstanding under our 2027 Revolving Credit Facility and the B+L Revolving Credit Facility, (ii) $282 million of contractual interest payments on the New Secured Notes allocated to the reduction of the recorded premiums, as discussed above, (iii) $151 million of amounts outstanding under our Term Loan B Facilities and (iv) $7 million of repurchases and retirements of certain outstanding senior notes in the open market.

Net cash used in financing activities during 2022 was $474 million and was primarily driven by:

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(i) the repayment of the outstanding balance under our 2023 Revolving Credit Facility, (ii) the repayment of the outstanding balance of our 6.125% Senior Unsecured Notes, (iii) the repayment of the outstanding balances under our 2025 Term Loan B Facilities and (iv) the repurchase and retirement of certain outstanding senior notes in the open market with an aggregate par value of $927 million for approximately $550 million.

Net cash used in financing activities during 2021 was $1,513 million and was primarily driven by the repayments of debt of $3,440 million which consisted of:

(i) $1,600 million of 7.000% Senior Secured Notes due 2024 as part of the 2021 Refinancing Transactions (as defined below), (ii) the aggregate prepayments of $1,600 million using cash on hand, cash generated from operations and the net proceeds from the Amoun Sale and (iii) the repayment of $240 million previously drawn under our 2023 Revolving Credit Facility.

Issuance of long-term debt (net of discounts) of $2,100 million primarily includes:

(i) the proceeds of $1,575 million from the issuance of $1,600 million in principal amount of 4.875% Senior Secured Notes due June 2028 and (ii) draw downs of $525 million under our 2023 Revolving Credit Facility which we used primarily to make deposits of approximately $300 million, in the aggregate, into escrow funds under the terms of settlement agreements regarding the Glumetza Antitrust Litigation and to pay interest and other business expenses.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details regarding the financing activities previously described.

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Future Sources of Liquidity

Our primary sources of liquidity are our cash and cash equivalents, cash collected from customers, funds as available from our revolving credit facility, issuances of long-term debt and issuances of equity and equity-linked securities.

Our primary sources of liquidity are our cash and cash equivalents, cash collected from customers, funds as available from our revolving credit facilities and AR Credit Facility, issuances of long-term debt and issuances of equity and equity-linked securities.

We believe these sources will be sufficient to meet our current liquidity needs for the next twelve months.

Cash, cash equivalents and restricted cash and other settlements as presented in the Consolidated Balance Sheet as of December 31, 2023 includes $334 million of cash, cash equivalents and restricted cash held by legal entities of Bausch + Lomb.

Cash held by Bausch + Lomb legal entities and any future cash from the operations, investing and financing activities of Bausch + Lomb, is expected to be retained by Bausch + Lomb entities and are generally not available to support the operations, investing and financing activities of other legal entities, including Bausch Health unless paid as a dividend which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch + Lomb’s shareholders.

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

If opportunities are favorable, the Company may refinance or repurchase existing debt or issue equity or equity-linked securities.

Cash held by Bausch + Lomb legal entities and any future cash from the operations, investing and financing activities of Bausch + Lomb, is expected to be retained by Bausch + Lomb entities and is generally not available to support the operations, investing and financing activities of other legal entities, including Bausch Health unless paid as a dividend which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch + Lomb’s shareholders.

As discussed in Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements, as of December 31, 2023, we had aggregate maturities and mandatory payments of our principal balances of debt obligations as follows:

(in millions) 2024 2025 2026 2027 2028 2029 Thereafter Total

Total debt obligations $ 155 $ 2,790 $ 892 $ 6,748 $ 7,219 $ 1,609 $ 1,593 $ 21,006

We regularly evaluate market conditions, our liquidity profile and available financing alternatives for opportunities to enhance our capital structure and may consider executing financing transactions, including but not limited to, issuing new debt instruments, divesting of assets or businesses and issuing equity or equity-linked securities (including secondary offerings of a portion of our holdings of common shares of Bausch + Lomb), as deemed appropriate, to improve our capital structure and liquidity.

Long-term Debt

Long-term debt, net of unamortized premiums, discounts and issuance costs was $22,388 million and $20,766 million as of December 31, 2023 and 2022, respectively.

Aggregate contractual principal amounts due under our debt obligations were $19,110 million and $22,870 million as of December 31, 2022 and 2021, respectively, a decrease of $3,760 million.

On September 30, 2022, we closed the Exchange Offer, pursuant to which existing unsecured senior notes as set forth in the table below (collectively, the “Existing Unsecured Senior Notes”) with an aggregate outstanding principal balance of $5,594 million were exchanged for $3,125 million in aggregate principal balance of New Secured Notes (as defined below).

The Exchange Offer reduced our then aggregate outstanding principal debt balance by $2,469 million.

In accordance with U.S.

GAAP, we recognized a portion of this reduction as a gain of $570 million, net of third-party fees and the write-off of the unamortized debt discounts and issuance costs related to the Existing Unsecured Senior Notes, and were required to record the balance of the reduction in our debt balance of $1,835 million, as a premium on the New Secured Notes.

This premium will be reduced as we make interest payments on the New Secured Notes in the amounts as presented in the previously provided table under the caption “Exchange Offer”.

Due to the accounting treatment for the New Secured Notes, interest expense in the Company’s financial statements in future periods will not be representative of the contractual interest due at the New Secured Notes’ stated rates of interest.

Additionally, the portion of interest payments that reduce the premium recorded will be classified within Financing Activities in the Company’s Consolidated Statement of Cash Flows.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details on the accounting for the Exchange Offer.

The secured notes issued in the Exchange Offer consist of:

(“Intermediate Holdco”), an existing wholly-owned unrestricted subsidiary of the Company that holds 38.6% of the issued and outstanding common shares of Bausch + Lomb.

The aggregate principal amounts of the Existing Unsecured Senior Notes that were validly tendered and accepted by the Company in the Exchange Offer are set forth below:

(in millions) Total Aggregate Principal Amount Validly Tendered Percentage of Outstanding Existing Notes Validly Tendered

9.00% Senior Notes due 2025 $ 541 36 %

9.25% Senior Notes due 2026 752 50 %

8.50% Senior Notes due 2027 1,099 63 %

7.00% Senior Notes due 2028 540 72 %

5.00% Senior Notes due 2028 710 60 %

7.25% Senior Notes due 2029 373 50 %

6.25% Senior Notes due 2029 540 38 %

5.00% Senior Notes due 2029 371 44 %

5.25% Senior Notes due 2030 332 28 %

5.25% Senior Notes due 2031 336 37 %

Total $ 5,594

The Exchange Offer reduced the principal balances of our outstanding debt obligations by $2,469 million.

The Exchange Offer also had the effect of extending the maturities of approximately $2,400 million of aggregate principal balances of senior notes coming due during the years 2025 through 2027 out to the years 2028 and 2030.

Additionally, we have reduced our estimated interest requirements for the year 2023 by approximately $65 million.

In addition to the Exchange Offer, we made debt repayments and completed refinancing transactions during 2022 that reduced our outstanding debt obligations and extended certain maturities of our remaining debt obligations as previously discussed under “— Liquidity and Capital Resources — Cash Flows — Financing Activities”.

Senior Secured Credit Facilities

Senior Secured Credit Facilities under the 2018 Restated Credit Agreement

On June 1, 2018, the Company and certain of its subsidiaries as guarantors entered into the “Senior Secured Credit Facilities” under the Company’s Fourth Amended and Restated Credit and Guaranty Agreement, as amended by the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018 (the “2018 Restated Credit Agreement”) with a syndicate of financial institutions and investors as lenders.

Prior to the 2022 Amended Credit Agreement (as defined below), the 2018 Restated Credit Agreement provided for a revolving credit facility of $1,225 million, maturing on the earlier of June 1, 2023 and the date that is 91 calendar days prior to the scheduled maturity of indebtedness for borrowed money of the Company and Bausch Health Americas, Inc.

(“BHA”) in an aggregate principal amount in excess of $1,000 million (the “2023 Revolving Credit Facility”) and term loan facilities of original principal amounts of $4,565 million and $1,500 million, maturing in June 2025 (the “June 2025 Term Loan B Facility”) and November 2025 (the “November 2025 Term Loan B Facility”), respectively.

Senior Secured Credit Facilities under the 2022 Amended Credit Agreement

On May 10, 2022, the Company and certain of its subsidiaries as guarantors entered into a Second Amendment (the “Second Amendment”) to the Fourth Amended and Restated Credit and Guaranty Agreement (as amended by the Second Amendment, the “2022 Amended Credit Agreement”).

The 2022 Amended Credit Agreement provides for a new term loan facility with an aggregate principal amount of $2,500 million (the “2027 Term Loan B Facility”) maturing on February 1, 2027 and a new revolving credit facility of $975 million (the “2027 Revolving Credit Facility”) that will mature on the earlier of February 1, 2027 and the date that is 91 calendar days prior to the scheduled maturity of indebtedness for borrowed money of the Company and BHA in an aggregate principal amount in excess of $1,000 million.

Borrowings under the 2027 Revolving Credit Facility can be made in U.S.

dollars, Canadian dollars or Euros.

After giving effect to the Second Amendment, the 2023 Revolving Credit Facility, June 2025 Term Loan B Facility and November 2025 Term Loan B Facility were refinanced (such refinancing, the “Credit Agreement Refinancing”), along with certain of the Company’s existing senior notes, using net proceeds from the borrowings under the 2027 Term Loan B Facility, the B+L IPO and the B+L Debt Financing (as defined

below) and available cash on hand.

As of December 31, 2022, the Company had drawn $470 million on the 2027 Revolving Credit Facility.

Borrowings under the 2027 Term Loan B Facility bear interest at a rate per annum equal to, at the Company’s option, either:

(a) a forward-looking term rate determined by reference to the financing rate for borrowing U.S.

dollars overnight collateralized by U.S.

Treasury securities (“term SOFR rate”) for the interest period relevant to such borrowing or (b) a base rate determined by reference to the highest of:

(i) the prime rate (as defined in the 2022 Amended Credit Agreement), (ii) the federal funds effective rate plus 1/2 of 1.00% and (iii) the term SOFR rate for a period of one month plus 1.00% (or if such rate shall not be ascertainable, 1.50%) (provided, however that the term SOFR rate with respect to the 2027 Term Loan B Facility shall at no time be less than 0.50% per annum), in each case, plus an applicable margin.

Borrowings under the 2027 Revolving Credit Facility in:

dollars bear interest at a rate per annum equal to, at the Company’s option, either:

(a) the term SOFR rate (subject to a floor of 0.00% per annum) or (b) a U.S.

dollar base rate, (ii) Canadian dollars bear interest at a rate per annum equal to, at the Company’s option, either:

(a) a Canadian dollar offer rate or (b) a Canadian dollar prime and (iii) euros bear interest at a rate per annum equal to a term benchmark rate determined by reference to the cost of funds for euro deposits (“EURIBOR”) for the interest period relevant to such borrowing (subject to a floor of 0.00% per annum), in each case, plus an applicable margin.

Term SOFR rate loans are subject to a credit spread adjustment ranging from 0.10%-0.25%.

The applicable interest rate margin for borrowings under the 2027 Term Loan B Facility is 5.25% for term SOFR rate loans and 4.25% for U.S.

dollar base rate loans.

The applicable interest rate margin for borrowings under the 2027 Revolving Credit Facility ranges from 4.75% to 5.25% for term SOFR rate loans, BA rate loans and EURIBOR loans and 3.75% to 4.25% for U.S.

dollar base rate loans and Canadian prime rate loans.

In addition, the Company is required to pay commitment fees of 0.25%-0.50% per annum with respect to the unutilized commitments under the 2027 Revolving Credit Facility, payable quarterly in arrears.

The Company also is required to pay:

(i) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on term SOFR rate borrowings under the 2027 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.

Subject to certain exceptions and customary baskets set forth in the 2022 Amended 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 thresholds), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the 2022 Amended Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the 2022 Amended Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights and net proceeds thresholds).

These mandatory prepayments may be used to satisfy future amortization.

The amortization rate for the 2027 Term Loan B Facility is 5.00% per annum, or $125 million, payable in quarterly installments beginning on September 30, 2022.

The Company may direct that prepayments be applied to such amortization payments in order of maturity.

As of December 31, 2022, the remaining mandatory quarterly amortization payments for the 2027 Term Loan B Facility were $500 million through December 2026.

The 2022 Amended Credit Agreement permits the incurrence of incremental credit facility borrowings up to the greater of $1,000 million and 40% of Consolidated Adjusted EBITDA (non-GAAP) (as defined in the 2022 Amended 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.

The 2022 Amended Credit Agreement provides that Bausch + Lomb shall initially be a “restricted” subsidiary subject to the terms of the 2022 Amended Credit Agreement covenants but does not require Bausch + Lomb to guarantee the obligations under the 2022 Amended Credit Agreement.

The 2022 Amended Credit Agreement permits the Company to designate Bausch + Lomb as an “unrestricted” subsidiary under the 2022 Amended Credit Agreement and no longer subject to the terms of the covenants thereunder provided that no event of default is continuing or will result from such designation and the total leverage ratio of Remainco (as defined in the 2022 Amended Credit Agreement) will not be greater than 7.60:1.00 on a pro forma basis.

The Credit Agreement Refinancing contains provisions designed to facilitate the B+L Separation.

Aggregate contractual principal amounts due under our debt obligations were $21,006 million and $19,110 million as of December 31, 2023 and 2022, respectively, an increase of $1,896 million.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further for additional information regarding long term debt.

Senior Secured Credit Facilities under the B+L Credit Agreement

On May 10, 2022, Bausch + Lomb entered into a credit agreement (the “B+L Credit Agreement”, and the credit facilities thereunder, the “B+L Credit Facilities”) providing for a term loan of $2,500 million with a five-year term to maturity (the “B+L Term Facility”) and a five-year revolving credit facility of $500 million (the “B+L Revolving Credit Facility” and such

financing, the “B+L Debt Financing”).

The B+L Credit Facilities are secured by substantially all of the assets of Bausch + Lomb and its material, wholly-owned Canadian, U.S., Dutch and Irish subsidiaries, subject to certain exceptions.

The term loan is denominated in U.S.

dollars, and borrowings under the revolving credit facility will be made available in U.S.

On May 10, 2022, Bausch + Lomb entered into a credit agreement (the “B+L Credit Agreement”, and the credit facilities thereunder, the “B+L Credit Facilities”).

Prior to the September 2023 Credit Facility Amendment (as defined below), the Credit Agreement provided for a term loan of $2,500 million with a five-year term to maturity (the “B+L May 2027 Term Loan B Facility”) and a five-year revolving credit facility of $500 million (the “B+L Revolving Credit Facility”).

B+L 8.375% Senior Secured Notes and B+L Term Loan B Facility - September 2023 Financing

On September 29, 2023, Bausch + Lomb entered into an incremental term loan facility secured on a pari passu basis with its existing B+L May 2027 Term Loan B Facility.

This incremental term loan facility was entered into in the form of an incremental amendment (the “September 2023 Credit Facility Amendment”) to Bausch + Lomb’s existing Credit Agreement (the Credit Agreement, as amended by the September 2023 Credit Facility Amendment, the “B+L Amended Credit Agreement”) and consisted of borrowings of $500 million in new term B loans with a five-year term to maturity (the “B+L September 2028 Term Loan B Facility” and, together with the B+L May 2027 Term Loan B Facility and the B+L Revolving Credit Facility, the “ B+L Senior Secured Credit Facilities”).

A portion of the proceeds from the B+L September 2028 Term Loan B Facility and the B+L October 2028 Secured Notes were used to finance the $1,750 million upfront payment related to the XIIDRA Acquisition (as discussed further in Note 3, “ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE” to our audited Consolidated Financial Statements) and related acquisition and financing costs.

The B+L Senior Secured Credit Facilities are secured by substantially all of the assets of Bausch + Lomb and its material, wholly-owned Canadian, U.S., Dutch and Irish subsidiaries, subject to certain exceptions.

The B+L May 2027 Term Loan B Facility and B+L September 2028 Term Loan B Facility are denominated in U.S.

dollars, and borrowings under the B+L Revolving Credit Facility may be made available in U.S.

dollars, euros, pounds sterling and Canadian dollars.

As of December 31, 2022, the principal amount outstanding under the B+L Term Facility was $2,488 million and $2,439 million net of issuance costs.

The B+L Revolving Credit Facility remained undrawn.

Borrowings under the B+L Revolving Credit Facility in:

dollars bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either:

(a) a term Secured Overnight Financing Rate (“SOFR”)-based rate or (b) a U.S.

dollar base rate, (ii) Canadian dollars bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either:

(a) Canadian Dollar Offered Rate (“CDOR”) or (b) a Canadian dollar prime rate, (iii) euros bear interest at a rate per annum equal to EURIBOR and (iv) pounds sterling bear interest at a rate per annum equal to Sterling Overnight Index Average (“SONIA”) (provided, however, that the term SOFR-based rate, CDOR, EURIBOR and SONIA shall be no less than 0.00% per annum at any time and the U.S.

dollar base rate and the Canadian dollar prime rate shall be no less than 1.00% per annum at any time), in each case, plus an applicable margin.

Term SOFR-based loans are subject to a credit spread adjustment of 0.10%.

The applicable interest rate margins for borrowings under the B+L Revolving Credit Facility are:

(i) between 0.75% to 1.75% with respect to U.S.

dollar base rate or Canadian dollar prime rate borrowings and between 1.75% to 2.75% with respect to term SOFR, EURIBOR, SONIA or CDOR borrowings based on Bausch + Lomb’s total net leverage ratio and (ii) after:

(x) Bausch + Lomb’s senior unsecured non-credit-enhanced long term indebtedness for borrowed money receives an investment grade rating from at least two of S&P, Moody’s and Fitch and (y) the B+L Term Facility has been repaid in full in cash (the “IG Trigger”), between 0.015% to 0.475% with respect to U.S.

dollar base rate or Canadian dollar prime rate borrowings and between 1.015% to 1.475% with respect to SOFR, EURIBOR, SONIA or CDOR borrowings based on Bausch + Lomb’s debt rating.

In addition, Bausch + Lomb is required to pay commitment fees of 0.25% per annum in respect of the unutilized commitments under the B+L Revolving Credit Facility, payable quarterly in arrears until the IG Trigger and a facility fee between 0.110% to 0.275% of the total revolving commitments, whether used or unused, based on Bausch + Lomb’s debt rating and payable quarterly in arrears.

Bausch + Lomb is also required to pay letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on SOFR borrowings under the B+L Revolving Credit Facility on a per annum basis, payable quarterly in arrears, as well as customary fronting fees for the issuance of letters of credit and agency fees.

Borrowings under the B+L Term Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either (i) a term SOFR-based rate plus an applicable margin of 3.25% or (ii) a US dollar base rate plus an applicable margin of 2.25% (provided, however, that the term SOFR-based rate shall be no less than 0.50% per annum at any time and the U.S.

dollar base rate shall not be lower than 1.50% per annum at any time).

Term SOFR-based loans are subject to a credit spread adjustment of 0.10%.

Subject to certain exceptions and customary baskets set forth in the B+L Credit Agreement, Bausch + Lomb is required to make mandatory prepayments of the loans under the B+L Term Facility under certain circumstances, including from:

(i) 100% of the net cash proceeds of insurance and condemnation proceeds for property or asset losses (subject to reinvestment rights, decrease based on leverage ratios and net proceeds threshold), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the B+L Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the B+L Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights, decrease based on leverage ratios and net proceeds threshold).

These mandatory prepayments may be used to satisfy future amortization.

The amortization rate for the B+L Term Facility is 1.00% per annum and the first installment was paid on September 30, 2022.

Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity.

As of December 31, 2022, the remaining mandatory quarterly amortization payments for the Term Facility were $106 million through March 2027, with the remaining term loan balance being due in May 2027.

As of December 31, 2023, the B+L Revolving Credit Facility had $275 million of outstanding borrowings, $26 million of issued and outstanding letters of credit and $199 million of remaining availability.

On September 29, 2023, Bausch + Lomb issued $1,400 million aggregate principal amount of 8.375% Senior Secured Notes due October 2028.

A portion of the proceeds from the B+L October 2028 Secured Notes, along with the proceeds of B+L September 2028 Term Loan B Facility, were used to finance the $1,750 million upfront payment related to the XIIDRA Acquisition (as discussed above) and related acquisition and financing costs.

The B+L October 2028 Secured Notes accrue interest at a rate of 8.375% per year, payable semi-annually in arrears on each April 1 and October 1, commencing on April 1, 2024.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details.

Accounting for the Exchange Offer

The Company performed an assessment of the Exchange Offer and determined that it met the criteria to be accounted for as a troubled debt restructuring under Accounting Standards Codification 470-60.

As a result of the application of this accounting, the difference between the principal amount of the New Secured Notes and their carrying value was recorded as a premium and is included in long-term debt on the Company’s Consolidated Balance Sheet.

The original premium recorded on the New Secured Notes was $1,835 million, which will be reduced as contractual interest payments are made on the New Secured Notes.

The portion of each contractual interest payment allocated to reduce the recorded premium is determined as the difference between the payment due and the calculated interest at the effective interest rate of the underlying carry amount of the associated note.

During 2023, contractual interest related to the New Secured Notes was $321 million, of which $282 million was recorded as a reduction of the recorded premium.

The following table presents the future scheduled contractual interest payments of the New Secured Notes.

Contractual interest payments will be allocated to the reduction of the recorded premium and interest expense as presented below.

The amount of interest which reduces the recorded premium will be reported as a financing activity in the Consolidated Statements of Cash Flows.

(in millions) 2024 2025 2026 2027 2028 2029 and thereafter Total

Interest payments:

11.00% First Lien Secured Notes due 2028 $ 195 $ 195 $ 195 $ 195 $ 196 $ — $ 976

14.00% Second Lien Secured Notes due 2030 49 49 49 49 49 99 344

9.00% Intermediate Holdco Secured Notes due 2028 90 90 90 90 45 — 405

$ 334 $ 334 $ 334 $ 334 $ 290 $ 99 $ 1,725

Interest payments recorded as:

Interest expense $ 39 $ 36 $ 34 $ 31 $ 25 $ 7 $ 172

Reduction of recorded premium 295 298 300 303 265 92 1,553

$ 334 $ 334 $ 334 $ 334 $ 290 $ 99 $ 1,725

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details on the accounting for the Exchange Offer.

Senior Secured Notes

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The Senior Secured Notes and the guarantees rank equally in right of repayment with all of the Company’s and Note Guarantors’ respective existing and future unsubordinated indebtedness and senior to the Company’s and Note Guarantors’ respective future subordinated indebtedness.

The Senior Secured Notes and the guarantees related thereto are effectively pari

passu with the Company’s and the Note Guarantors’ respective existing and future indebtedness secured by a first priority lien on the collateral securing the Senior Secured Notes and effectively senior to the Company’s and the Note Guarantors’ respective existing and future indebtedness that is unsecured, including the existing Senior Unsecured Notes, or that is secured by junior liens, in each case to the extent of the value of the collateral.

The Senior Secured Notes and the guarantees related thereto are effectively pari passu with the Company’s and the Note Guarantors’ respective existing and future indebtedness secured by a first priority lien on the collateral securing the Senior Secured Notes and effectively senior to the Company’s and the Note Guarantors’ respective existing and future indebtedness that is unsecured, including the existing Senior Unsecured Notes, or that is secured by junior liens, in each case to the extent of the value of the collateral.

In addition, the Senior Secured Notes are structurally subordinated to:

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Upon the occurrence of a change in control (as defined in the indentures governing the Senior Secured Notes), unless the Company has exercised its right to redeem all of the notes of a series, holders of the Senior Secured Notes may require the Company to repurchase such holder’s notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest.

New BHC Secured Notes

The 11.00% First Lien Secured Notes mature on September 30, 2028, and have a stated interest of 11.00% per year that is payable semi-annually in arrears on each March 30 and September 30.

The 11.00% First Lien Secured Notes are redeemable, in whole or in part, at any time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including the date of redemption plus a “make-whole” premium as described in the 11.00% First Lien Secured Notes indenture.

The 14.00% Second Lien Secured Notes mature on October 15, 2030, and have a stated interest of 14.00% per year that is payable semi-annually in arrears on each April 15 and October 15.

The 14.00% Second Lien Secured Notes will be redeemable, in whole or in part, at any time on or after October 15, 2025 at the applicable redemption prices set forth in the 14.00% Second Lien Secured Notes indenture.

In addition, some or all of the 14.00% Second Lien Secured Notes may be redeemed prior to October 15, 2025 at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including the date of redemption plus a “make-whole” premium as described in the 14.00% Second Lien Secured Notes indenture.

At any time prior to October 15, 2025, up to 40% of the aggregate principal amount of the 14.00% Second Lien Secured Notes may be redeemed with the net proceeds of certain equity offerings at the redemption price set forth in the 14.00% Second Lien Secured Notes indenture.

9.00% Intermediate Holdco Secured Notes

The 9.00% Intermediate Holdco Secured Notes mature on January 30, 2028, and have a stated interest of 9.00% per year that is payable semi-annually in arrears on each January 30 and July 30.

The 9.00% Intermediate Holdco Secured Notes are redeemable at the option of Intermediate Holdco, in whole or in part, at any time, at the redemption prices set forth in the 9.00% Intermediate Holdco Secured Notes indenture.

The 9.00% Intermediate Holdco Secured Notes are general senior secured obligations of Intermediate Holdco and secured by first priority liens (subject to permitted liens and certain other exceptions) on substantially all of the assets of Intermediate Holdco, which as of December 31, 2022 were comprised of 38.6% of the issued and outstanding common shares of Bausch + Lomb Corporation.

The 9.00% Intermediate Holdco Secured Notes and Intermediate Holdco’s other obligations under the indenture governing such notes are not obligations or responsibilities of, or guaranteed by, the Company, Bausch + Lomb or any of their respective affiliates or subsidiaries (other than the issuer Intermediate Holdco).

The sole recourse of the holders of the 9.00% Intermediate Holdco Secured Notes under the 9.00% Intermediate Holdco Secured Notes and the indenture governing such notes is limited to Intermediate Holdco and its assets.

The aggregate principal amount of our Senior Secured Notes and 9.00% Intermediate Holdco Secured Notes as of December 31, 2022 and 2021 was $7,905 million and $3,850 million, respectively, an increase of $4,055 million.

The increase is attributable to:

(i) the issuance of the New BHC Secured Notes and the issuance of the 9.00% Intermediate Holdco Secured Notes in connection with the Exchange Offer as previously discussed and (ii) the issuance of the February 2027 Secured Notes as previously discussed, partially offset by the repurchase of $70 million of secured notes in the open market.

Senior Unsecured Notes

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In connection with the closing of the B+L IPO, the discharge of the April 2025 Unsecured Notes Indenture and the related release under the 2022 Amended Credit Agreement described above, the guarantees and related security provided by Bausch + Lomb and its subsidiaries in respect of the existing senior notes of the Company and BHA were released.

If the Company experiences a change in control, the Company may be required to make an offer to repurchase each series of Senior Unsecured Notes, in whole or in part, at a purchase price equal to 101% of the aggregate principal amount of the Senior Unsecured Notes repurchased, plus accrued and unpaid interest.

The aggregate principal amount of our Senior Unsecured Notes as of December 31, 2022 and 2021 was $5,798 million and $14,900 million, respectively, a decrease of $9,102 million, attributable to:

(i) Existing Unsecured Notes of $5,594 million validly tendered and accepted in connection with the Exchange Offer, (ii) the redemption in full of $2,650 million of April 2025 Unsecured Notes and (iii) the repurchase and retirement of certain outstanding Senior Unsecured Notes in the open market with an aggregate par value of approximately $857 million.

The Senior Notes and Secured Notes are guaranteed by a portion of the Company’s subsidiaries.

On a non-consolidated basis, the non-guarantor subsidiaries had total assets of $16,306 million and $12,800 million and total liabilities of $9,497 million and $5,401 million as of December 31, 2023 and 2022, and revenues of $4,653 million and $4,164 million and operating income of $119 million and $114 million for 2023 and 2022, respectively.

The aggregate principal amount of our Senior Unsecured Notes as of December 31, 2023 and 2022 was $5,791 million and $5,798 million, respectively, a decrease of $7 million, attributable to the repurchase and retirement of certain outstanding Senior Unsecured Notes in the open market with an aggregate par value of approximately $8 million.

Accounts Receivable Credit Facility

On June 30, 2023, we entered into the AR Credit Facility with certain third-party lenders, providing for a non-recourse financing facility collateralized by certain of the Company’s accounts receivable.

The AR Facility Agreement provides for an up to $600 million facility, subject to certain borrowing base tests.

Under the AR Credit Facility, the Borrower purchases accounts receivable, originated by a wholly-owned subsidiary of Bausch Health, which collateralize borrowings under the AR Credit Facility.

The Borrower is a bankruptcy remote entity that is unrestricted under the Company’s debt covenants, and which is consolidated by the Company.

Borrowings under the AR Credit Facility are in U.S.

dollars and bear interest at a rate per annum equal to, the sum of the one month term SOFR plus 6.65%.

The Company is required to pay commitment fees of 0.75% multiplied by the lesser of:

(i) the unfunded portion of the lenders’ commitments or (ii) 50% of the total lenders’ commitments.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further for additional details.

Availability Under Revolving Credit Facilities

As of the date of this filing, February 23, 2023, there were $420 million of outstanding borrowings, $25 million of issued and outstanding letters of credit and approximately $530 million of remaining availability under the 2027 Revolving Credit Facility.

As of the date of this filing, February 23, 2023, there were no outstanding borrowings, $24 million of issued and outstanding letters of credit and $476 million remaining availability under the B+L Revolving Credit Facility.

As of February 22, 2024, there were no outstanding borrowings, $23 million of issued and outstanding letters of credit and approximately $950 million of remaining availability under the 2027 Revolving Credit Facility.

As of February 22, 2024, we have $325 million of outstanding borrowings, in the aggregate, and the AR Facility Agreement provides for up to an additional $275 million of availability, subject to certain borrowing base tests.

As of February 22, 2024, there were $225 million of outstanding borrowings, $26 million of issued and outstanding letters of credit and $249 million remaining availability under the B+L Revolving Credit Facility.

Absent the payment of a dividend, which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch + Lomb’s shareholders, proceeds from the B+L Revolving Credit Facility are not available to fund the operations, investing and financing activities of Bausch Health.

Covenant Compliance

As of December 31, 2023, the Company was in compliance with the financial maintenance covenant related to its outstanding debt.

The Company, based on its current forecast for the next twelve months from the date of issuance of this Form 10-K, expects to remain in compliance with the financial maintenance covenant and meet its debt service obligations over that same period.

Any inability to comply with the covenants under the terms of our 2022 Amended Credit Agreement, Senior Secured Notes indentures or Senior Unsecured Notes indentures could lead to a default or an event of default for which we may need to seek relief from our lenders and noteholders in order to waive the associated default or event of default and avoid a potential acceleration of the related indebtedness or cross-default or cross-acceleration to other debt.

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In addition, the lenders under our 2022 Amended Credit Agreement, holders of our Senior Secured Notes and holders of our Senior Unsecured Notes may impose additional operating and financial restrictions on us as a condition to granting any such waiver.

Since 2017 through the date of this filing, the Company completed several actions which included repaying debt with proceeds from divestitures and cash flows from operations, as well as refinancing debt with near term maturities.

These actions have reduced the Company’s debt balance and positively affected the Company’s ability to comply with its financial maintenance covenant.

On November 29, 2022, the Company designated 1261229 B.C.

Ltd., the entity that directly or indirectly holds 89% of the issued and outstanding shares of Bausch + Lomb, as an unrestricted subsidiary of the Company in accordance with the terms of the Company’s indentures.

As of December 31, 2023, 1261229 B.C.

Ltd., directly or indirectly held 88% of the issued and outstanding shares of Bausch + Lomb, as an unrestricted subsidiary of the Company in accordance with the terms of the Company’s indentures.

In connection therewith, Bausch + Lomb and its subsidiaries, are now unrestricted subsidiaries of the Company and, as a result, are no longer subject to the covenants under the relevant Bausch Health indentures, and the earnings and debt of Bausch + Lomb, as defined in the relevant indentures, are also not included in the calculation of the Company’s financial maintenance covenant.

As of December 31, 2022, the Company was in compliance with the financial maintenance covenant related to its outstanding debt.

The Company continues to take steps to seek to improve its operating results to ensure continual compliance with its financial maintenance covenant and take other actions to reduce its debt levels to align with the Company’s long-term strategy.

The Company may consider taking other actions, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities including secondary offerings of the common shares of Bausch + Lomb, as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations.

The Senior Notes and Secured Notes are guaranteed by a portion of the Company’s subsidiaries.

On a non-consolidated basis, the non-guarantor subsidiaries had total assets of $12,800 million and $2,161 million and total liabilities of $5,401 million and $942 million as of December 31, 2022 and 2021, respectively.

On a non-consolidated basis, the non-guarantor subsidiaries had revenues of $4,164 million and $1,755 million for 2022 and 2021, respectively.

On a non-consolidated basis, the non-guarantor subsidiaries had operating income of $114 million and $116 million for 2022 and 2021, respectively.

Weighted Average Interest Rate

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The weighted average interest rate of our debt as reported in our financial statements and the weighted average stated rate of interest was 6.59% and 8.05%, respectively, as of December 31, 2023.

The weighted average stated rate of interest of the Company’s outstanding debt as of December 31, 2021 was 5.88%.

The increase in the weighted average stated rate of interest of 186 bps is due to the issuance of the New Secured Notes in connection with the Exchange Offer.

See Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements for further details.

Focus on Capitalization of the Post-separation Entities

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Moody’s Caa2 Caa1 Ca Negative B1 Negative

Standard & Poor’s CCC+ B- CCC Stable B- B- Positive

Fitch CCC B CC No Outlook B- BB- Rating Watch Evolving

Standard & Poor’s CCC CCC+ CCC- Negative B- B- Positive

Fitch CCC B C No Outlook B- BB- Rating Watch Evolving

Bausch Health Companies Inc.

- On September 30, 2022, Moody’s downgraded all ratings to:

a corporate rating of Caa2, a senior secured rating of Caa1 and a senior unsecured rating of Ca.

On October 4, 2022, S&P lowered its senior secured rating to B-.

On October 6, 2022, Fitch downgraded all ratings to:

a corporate rating of CCC, a senior secured rating of B and a senior unsecured rating of CC.

These downgrades were a result of the Exchange Offer (see Note 10, “FINANCING ARRANGEMENTS” to our audited Consolidated Financial Statements).

Bausch + Lomb Corporation - During December 2022, S&P upgraded these ratings one notch from CCC+ to B-, as a result of BHC designating Bausch + Lomb as an unrestricted subsidiary under the BHC Credit Agreement and the BHC Indentures.

- On October 3, 2023, Fitch lowered its senior unsecured rating to C.

Bausch + Lomb Corporation - There were no changes to the corporate credit ratings of Bausch + Lomb Corporation during the fourth quarter of 2023, as compared to the third quarter of 2023.

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

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In addition to our working capital requirements, as of December 31, 2023, we expect our primary cash requirements for 2024 to include:

• Debt repayments and interest payments —Based on our debt portfolio, we expect to make mandatory amortization and interest payments of $1,649 million during 2023.

• Debt repayments and interest payments —Based on our debt portfolio, we expect to make mandatory amortization and interest payments of approximately $1,800 million during 2024.

We have and, in the future, may also elect to make additional principal payments under certain circumstances.

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• Capital expenditures —We expect to make payments of approximately $320 million for property, plant and equipment during 2024;

• Milestones —As previously discussed, we filed an NDA for NOV03 with the FDA in June 2022.

If approved, we anticipate launching NOV03 in the U.S.

in the second half of 2023, upon which we expect to make a payment of $45 million in 2023, under the terms of a December 2019 agreement with Novaliq GmbH, related to the future sales associated with NOV03.

• Contingent consideration payments —We expect to make contingent consideration and other development/approval/sales-based milestone payments of approximately $112 million during 2023;

• Contingent consideration and milestone payments —We expect to make contingent consideration payments of approximately $40 million during 2024 and;

• Benefit obligations —We expect to make aggregate payments under our pension and postretirement obligations of $11 million during 2024.

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In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations, charges and proceedings.

During 2022, we made $1,572 million in payments of accrued legal settlements including payments related to the Securities Class Action Settlement, the Glumetza Antitrust Litigation and a RICO class action matter.

As of December 31, 2023, the Company’s Consolidated Balance Sheet includes accrued loss contingencies of $344 million related to matters which are both probable and reasonably estimable, however, a reliable estimate of the period in which the remaining loss contingencies will be payable, if ever, cannot be made.

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These cost savings programs may include, but are not limited to:

(i) reducing headcount, (ii) eliminating real estate costs associated with unused or under-utilized facilities and

(iii) implementing contribution margin improvement and other cost reduction initiatives.

(i) reducing headcount, (ii) eliminating real estate costs associated with unused or under-utilized facilities and (iii) implementing contribution margin improvement and other cost reduction initiatives.

The expenses associated with the implementation of these cost savings programs could be material and may impact our cash flows.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies and estimates are those policies and estimates that are most important and material to the preparation of our Consolidated Financial Statements, and which require management’s most subjective and complex judgments due to the need to select policies from among alternatives available, and to make estimates about matters that are inherently uncertain.

inherently uncertain.

We base our estimates on historical experience and other factors that we believe to be reasonable under the circumstances.

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At December 31, 2023, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 6% to 28%.

To determine if an acquisition should be accounted for as a business combination or an asset acquisition, the Company first determines whether the set of assets acquired and/or liabilities assumed constitutes a business.

If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar assets acquired are not a business.

To be considered a business, set of assets acquired and/or liabilities assumed acquired must include the minimum inputs and substantive processes necessary to significantly contribute to the ability to produce outputs exist.

If the set of assets acquired and/or liabilities assumed are deemed to constitute a business, the Company accounts for the acquisition as a business combination.

Under a business combination, the Company measures the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their acquisition-date fair values.

• The fair value of the identifiable intangible assets is determined primarily using the “income approach,” which primarily consists of the following estimates and inputs:

(i) a forecast of the expected future cash flows, which includes an estimated amount and timing of projected cash flows (including revenue growth rates, cost of goods sold, and operating expenses) and (ii) the risk-adjusted discount rate used to present value the cash flows.

The fair value of acquired in-process research and development (“IPR&D”) is also recognized at fair value using an income approach and consists of the following estimates and inputs:

(i) each asset’s probability-adjusted future cash flows, which reflect the different stages of development of each product and the associated probability of successful completion and (ii) the risk-adjusted discount rate used to present value the cash flows.

• Acquisition-related contingent consideration, which primarily consists of potential milestone payments, is determined in accordance with the acquisition method of accounting.

The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the Consolidated Statements of Operations.

The fair value measurement of contingent consideration obligations arising from business combinations is determined via a probability-weighted discounted cash flow analysis, using unobservable (Level 3) inputs.

These inputs may include:

(i) the estimated amount and timing of projected cash flows, (ii) the probability of the achievement of the factor(s) on which the contingency is based and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows.

• Goodwill is recorded with the acquisition and is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed.

Transaction costs and costs to restructure the acquired company are expensed as incurred and the operating results of the acquired business are reflected in the Company’s audited Consolidated Financial Statements from the date of acquisition.

If the set of assets acquired and/or liabilities assumed are deemed to not constitute a business, the transaction is accounted for as an asset acquisition.

Under an asset acquisition, the cost accumulation model is used to recognize the assets acquired and liabilities assumed.

In this model, the cost of acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of relative fair values.

Goodwill is not recognized in an asset acquisition.

The amount allocated to acquired IPR&D with no alternative future use is charged to Other expense at the acquisition date and any future contingent consideration is not recorded until it becomes probable.

Intangible Assets

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In particular, we will continue to monitor closely the progression of our R&D programs as their likelihood of success is contingent upon the achievement of future milestones.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Focus on Core Business” for additional information regarding our R&D programs.

During the years 2022, 2021 and 2020, we recorded goodwill impairment charges of $824 million, $469 million and $0, respectively.

As of December 31, 2022, we maintain 10 reporting units, eight of which comprise our goodwill balance.

During the years 2023, 2022 and 2021, we recorded goodwill impairment charges of $493 million, $824 million and $469 million, respectively.

As of December 31, 2023, we maintain 10 reporting units, nine of which comprise our goodwill balance.

We test our reporting units for impairment annually as of October 1, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

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We test reporting units for impairment by comparing the estimated fair value of each reporting unit with its carrying amount.

If the carrying amount of a reporting unit exceeds its estimated fair value, we record an impairment based on the difference between the fair value and carrying amount the reporting units as a reduction to goodwill.

If the carrying amount of a reporting unit exceeds its estimated fair value, we record an impairment based on the difference between the fair value and carrying amount of the reporting units as a reduction to goodwill.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.

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These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, growth rates and other market factors.

During 2022, we performed interim impairment assessments of our Ortho Dermatologics reporting unit within the Diversified Products segment, our Salix reporting unit, and our Vision Care, Surgical and Ophthalmic reporting units within the Bausch + Lomb segment.

Our annual goodwill impairment test as of October 1, 2022, included performing separate quantitative fair value tests for the Neurology and Other reporting unit within the Diversified Products segment, as well as the Vision Care, Surgical and Ophthalmic reporting units within the Bausch + Lomb segment.

During 2023, we performed interim assessments of our Dermatology and Neurology reporting units within the Diversified segment.

Our annual goodwill impairment test as of October 1, 2023, included performing separate quantitative fair value tests for the International reporting unit, the Generics reporting unit within our Diversified segment and the three reporting units within our Bausch + Lomb segment.

For our remaining reporting units, we conducted our annual goodwill impairment test as of October 1, 2023, by first assessing qualitative factors.

Based on our qualitative assessment as of October 1, 2022, management believed that it was more likely than not that the carrying amounts of its remaining 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.

Ortho Dermatologics

As part of our 2021 annual testing, we determined that the Ortho Dermatologics reporting unit had approximately 10% headroom as of October 1, 2021.

Given its limited headroom, we continued to monitor the market conditions impacting the Ortho Dermatologics reporting unit during each quarterly reporting period and performed quantitative fair value testing as of March 31, 2022, June 30, 2022 and September 30, 2022.

The quantitative fair value tests utilized our most recent cash flow projections for the Ortho Dermatologics reporting unit as revised at each testing date to reflect current market conditions and current trends in business performance.

Based on our qualitative assessment as of October 1, 2023, we believed that it was more likely than not that the carrying amounts of the remaining 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 our 2021 annual testing, we determined that the Dermatology reporting unit had approximately 10% headroom as of October 1, 2021.

Given its limited headroom, we continued to monitor the market conditions impacting the Dermatology reporting unit during each quarterly reporting period and performed quantitative fair value testing as of March 31, 2022, June 30, 2022 and September 30, 2022.

The quantitative fair value tests utilized our most recent cash flow projections for the Dermatology reporting unit as revised at each testing date to reflect current market conditions and current trends in business performance.

Our discounted cash flow models for the reporting unit also considered among other matters, volatility in many of the equity markets and pressures on market interest rates and macroeconomic factors such as changes in inflation for many commodities.

As a result of these market conditions, trends in business performance, the revisions to our long-term expectations and other factors, our Ortho Dermatologics reporting unit was impaired during our interim testing reflecting our best estimate at that time of the outlook and risks of this business.

As a result of these market conditions, trends in business performance, the revisions to our long-term expectations and other factors, our Dermatology reporting unit was impaired during our interim testing reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed no impairment was identified during the three months ended March 31, 2022, however goodwill impairments of $83 million and $119 million were recorded during the three months ended June 30, 2022 and September 30, 2022, respectively.

As a result, there was zero headroom in the Ortho Dermatologics reporting unit as of September 30, 2022.

As a result, there was zero headroom in the Dermatology reporting unit as of September 30, 2022.

During the fourth quarter of 2022, we evaluated the reporting unit’s performance as well as our revised long-term forecasts in light of current market conditions, current trends in business performance and the expected impacts of management’s latest business strategies.

This evaluation supported management’s previous expectations for long-term business performance.

Additionally, based on corporate bond rates as of December 31, 2022, we concluded that discount rates would not have increased during the fourth quarter as compared to the discount rate used in determining the fair value of the reporting unit as of September 30, 2022.

As a result, no facts or circumstances were identified which indicate that additional fair value quantitative testing during the period October 1, 2022 through December 31, 2022 was necessary.

Additionally, based on corporate bond rates as of December 31, 2022, we concluded that discount rates would not

have increased during the fourth quarter as compared to the discount rate used in determining the fair value of the reporting unit as of September 30, 2022.

As a result, no facts or circumstances were identified which indicated that additional fair value quantitative testing during the period October 1, 2022 through December 31, 2022 was necessary.

Through the nine months ended September 30, 2023, the Dermatology reporting unit performed largely in line with the forecast used in its last quantitative fair value test (September 30, 2022).

During the third quarter of 2023, as a result of lower realized pricing attributable to shifts in the coverage mix for certain products, discontinuation of certain products as a result of the impact of recent legislation, and revised expectations of future selling, advertising, and promotion costs required to mitigate further revenue erosion, the Company’s assessment of future business performance indicated that the reporting unit’s future financial results were below the assumptions used in the last quantitative fair value test.

After considering the limited headroom as a result of the impairment to goodwill of the Dermatology reporting unit when last tested (September 30, 2022), the Company determined that these changes in facts and circumstances, as well as increases in market interest rates during the three months ended September 30, 2023, the Dermatology reporting unit was impaired.

The quantitative assessment utilized a long-term growth rate of 0.0% and a discount rate of 10.75% in the estimation of the reporting unit’s fair value.

Based on the quantitative fair value testing, a goodwill impairment of $151 million was recognized.

This includes recent changes related to pharmaceutical pricing by the Federal government, including the passage of the Inflation Reduction Act (IRA) in August 2022 and, effective in 2024, changes to Medicaid rebate caps (passed as part of the American Rescue Plan Act of 2021).

In response to these pressures, as well as to consider current market conditions and anticipated increased competition from new market entrants in 2023, we took steps to:

(i) reassess our pricing strategies, (ii) re-evaluate our marketing and promotional efforts and (iii) reduce our cost structure, and we have revised our long-term forecasts for the Neurology reporting unit to reflect these developments.

As a result of the revisions to our long-term expectations for these and other factors, goodwill for our Neurology reporting unit was impaired during our 2022 annual impairment test reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as October 1, 2022, a $622 million impairment to the goodwill of the Neurology reporting unit was recognized.

Through the nine months ended September 30, 2023, the Neurology reporting unit performed largely in line with the forecast used in its last quantitative fair value test (October 1, 2022).

During the third quarter of 2023, as a result of actions taken by management in response to changing market dynamics driven by recent legislation, changes to the future expected commercial insurance coverage for certain key products, and a projected shift in the channels of business, the Company’s assessment of future business performance indicated that the reporting unit’s future financial results were below the assumptions used in the last quantitative fair value test.

After considering the limited headroom as a result of the impairment to goodwill of the Neurology reporting unit when last tested (October 1, 2022), the Company determined that these changes in facts and circumstances, as well as increases in market interest rates during the three months ended September 30, 2023, the Neurology reporting unit was impaired.

The quantitative assessment utilized a long-term growth rate of -2.5% and a discount rate of 10.50% in the estimation of the reporting unit’s fair value.

Based on the quantitative fair value testing, a goodwill impairment of $121 million was recognized.

The Generics reporting unit operates in the United States, where shifting market dynamics have led to increased competition with respect to generic pharmaceuticals which impacts both pricing and potential market share.

We expect these dynamics to intensify in the future, and as such have revised our long-term forecasts, including for the sale of Company branded products when they reach loss of exclusivity in the future to reflect these developments.

The quantitative fair value test for the Generics reporting unit utilized the most recent cash flow projections for the reporting unit as revised in the fourth quarter of 2023 to reflect current market conditions and current trends in business performance.

The quantitative assessment utilized a long-term growth rate of 1.0% and a discount rate of 10.25% in the estimation of the reporting unit’s fair value.

As a result of the revisions to its long-term expectations for these and other factors, and based on the quantitative fair value test, goodwill for the Generics reporting unit was impaired reflecting the Company’s best estimate at that time of the outlook and risks of this business.

The carrying value of the Generics reporting unit exceeded its fair value as of October 1, 2023, and the Company recognized a goodwill impairment of $91 million.

As of December 31, 2023, the Generics reporting unit had remaining goodwill of $227 million.

International

The quantitative fair value test for the International reporting unit utilized the most recent cash flow projections for the reporting unit as revised in the fourth quarter of 2023 which reflected current market conditions and current trends in business performance.

The quantitative assessment utilized a long-term growth rate of 3.0% and discount rate of 12.50%, in the estimation of the fair value of the reporting unit.

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

On August 10, 2022, the Norwich Legal Decision was issued that held, among other matters, that certain U.S.

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The ultimate outcome of the Norwich Legal Decision and other potential future related developments, including a competitor’s ability to launch a successful generic version to Xifaxan ® , could impact the timing and extent of future revenues and cash flows associated with Xifaxan ® .

As a result of the uncertainty of the possible outcomes of the Norwich Legal Decision and the potential impact on Xifaxan ® revenues we performed a quantitative fair value test as of September 30, 2022.

Our quantitative fair value test used a probability-weighted discounted cash flow analysis, with a base case representing the our most recent cash flow projections as revised in the third quarter of 2022, as well as different scenarios representing a range of different outcomes which address, among other things, the range of possible outcomes of the Norwich Legal Decision and the timing of when a competitor or competitors could be able to successfully launch a generic version of Xifaxan ® , if they are able to launch one at all.

As a result of the uncertainty of the possible outcomes of the Norwich Legal Decision and the potential impact on Xifaxan ® cash flows, we performed a quantitative fair value test as of September 30, 2022.

Our quantitative fair value test used a probability-weighted discounted cash flow analysis, with a base case representing our most recent cash flow projections as revised in the third quarter of 2022, as well as different scenarios representing a range of different outcomes which address, among other things, the range of possible outcomes of the Norwich Legal Decision and the timing of when a competitor or competitors could be able to successfully launch a generic version of Xifaxan ® , if they are able to launch one at all.

We assigned a probability weighting to each scenario reflecting our best estimate of likelihood of the outcome and calculated a weighted average of the valuations derived from the discounted cash flows under each scenario using this probability weighting.

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As a result, no facts or circumstances were identified which would indicate that additional fair value quantitative testing during the period October 1, 2022 through December 31, 2022 was necessary.

Neurology and Other

In response to these pressures, as well as to consider current market conditions and anticipated increased competition from new market entrants in 2023, we have begun taking steps to:

As a result of the revisions to our long-term expectations for these and other factors, goodwill for our Neurology and Other reporting unit was impaired during our most recent annual impairment test reflecting our best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value testing performed as October 1, 2022, a $622 million impairment to the goodwill of the Neurology and Other reporting unit was recognized.

During 2023, no facts or circumstances were identified which would indicate that additional fair value quantitative testing was necessary.

Bausch + Lomb Reporting Units

The quantitative fair value test for the Vision Care, Surgical and Ophthalmic reporting units of the Bausch + Lomb segment as of October 1, 2022 utilized the most recent cash flow projections for each of the reporting units as revised in the fourth quarter of 2022 which reflected current market conditions and current trends in business performance.

After completing

the testing, the fair value of each of these reporting units had headroom in excess of 25%, and, therefore, there was no impairment to goodwill.

During the period October 1, 2022 through December 31, 2022, we continued to monitor the market conditions and trends in business performance for all our reporting units, including the Salix, Neurology and Other and Ortho Dermatologics reporting units, as discussed above.

We determined that, no events occurred, or circumstances changed that would indicate that the fair value of any reporting unit might be below its carrying value as of December 31, 2022.

The quantitative fair value test for the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment as of October 1, 2022 utilized the most recent cash flow projections for each of the reporting units as revised in the fourth quarter of 2022 which reflected current market conditions and current trends in business performance.

After completing the testing, the fair value of each of these reporting units had headroom in excess of 25%, and, therefore, there was no impairment to goodwill.

The quantitative fair value test for the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment as of October 1, 2023 utilized the most recent cash flow projections for each of the reporting units as revised in the fourth quarter of 2022 which reflected current market conditions and current trends in business performance.

After completing the testing, the fair value of each of these reporting units had headroom in excess of 25%, and, therefore, there was no impairment to goodwill.

During the period October 1, 2023 through December 31, 2023, we continued to monitor the market conditions and trends in business performance for all our reporting units, including the Dermatology, Neurology, International and Generics reporting units, as discussed above.

We determined that, no events occurred, or circumstances changed that would indicate that

the fair value of any reporting unit might be below its carrying value as of December 31, 2023.

Our reporting units that were impaired were written down to their respective fair values resulting in zero headroom as of the applicable impairment test dates.

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Market factors outside of our control, which could result in future impairment to our reporting units, include but are not limited to:

additional government-mandated pricing actions, higher than expected inflation, continued interest rate pressures, changes in medical reimbursements by third-party payors, additional unforeseen market entrants, unforeseen loss or exclusivity to significant products, changes in foreign currency exchange rates, the resurgence of COVID-19 or additional variants, unforeseen challenges to our patents including the ultimate outcome to the Norwich Legal Decision, geopolitical factors, changes in tax legislation and other significant adverse changes in the markets in which we operate.

additional government-mandated pricing actions, higher than expected inflation, continued interest rate pressures, changes in medical reimbursements by third-party payors, additional unforeseen market entrants, unforeseen loss or exclusivity to significant products, changes in foreign currency exchange rates, unforeseen challenges to our patents including the ultimate outcome to the Norwich Legal Decision, geopolitical factors, changes in tax legislation and other significant adverse changes in the markets in which we operate.

Additionally, factors such as our inability to successfully execute our business strategies, failure to attain our assumed growth rates and margins or should we decide to divest certain non-strategic assets could lead to the impairment of one or more of our reporting units in the future.

As outlined above, our quantitative fair value testing procedures performed during the three months ended September 30, 2023 and as of October 1, 2023 represented in the aggregate, approximately $7,820 million, or 70% of our $11,183 million goodwill balance as of December 31, 2023.

Our quantitative fair value testing procedures performed during the three months ended September 30, 2022 and as of October 1, 2022 represented in the aggregate, approximately $10,325 million, or 89% of our $11,547 million goodwill balance as of December 31, 2022.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our audited Consolidated Financial Statements for further details on the goodwill impairments recognized in 2023, 2022 and 2021.

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For example, certain countries could seek to tax a greater share of income than has been provided for by us.

The final outcome of any audits by taxation

authorities may differ from the estimates and assumptions we have used in determining our consolidated income tax provisions and accruals.

The final outcome of any audits by taxation authorities may differ from the estimates and assumptions we have used in determining our consolidated income tax provisions and accruals.

This could result in a material effect on our consolidated income tax provision, results of operations, and financial condition for the period in which such determinations are made.

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anticipated revenues for our products;

expected research and development (“R&D”) and marketing spend;

our expected primary cash and working capital requirements for 2023 and beyond;

expected R&D and marketing spend;

our expected primary cash and working capital requirements for this fiscal year and beyond;

the Company’s plans for continued improvement in operational efficiency and the anticipated impact of such plans;

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our ability to reduce debt levels;

our ability to comply with the financial and other covenants contained in the 2022 Amended Credit Agreement, and senior notes indentures;

the ability of our subsidiary, Bausch + Lomb, to comply with the financial and other covenants contained in the B+L Credit Agreement;

our ability to comply with the financial and other covenants contained in the 2022 Amended Credit Agreement, senior notes indentures and the AR Facility Agreement;

the ability of our subsidiary, Bausch + Lomb, to comply with the financial and other covenants contained in the B+L Senior Credit Facilities and the B+L October 2028 Secured Notes;

the impact of our distribution, fulfillment and other third-party arrangements;

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our impairment assessments, including the assumptions used therein and the results thereof;

the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition, the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts and the Company’s planned actions and responses to this pandemic;

the anticipated impact from the ongoing conflict between Russia and Ukraine;

the impact of the COVID-19 pandemic;

the anticipated impact from the ongoing conflicts between Russia and Ukraine and between Israel and Hamas;

and the Company’s plan to separate its eye- health business, including the structure and timing of completing such separation transaction.

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Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements.

Certain material factors or assumptions are applied

in making such forward-looking statements, including, but not limited to, factors and assumptions regarding the items previously outlined, those factors, risks and uncertainties outlined below and the assumption that none of these factors, risks and uncertainties will cause actual results or events to differ materially from those described in such forward-looking statements.

Certain material factors or assumptions are applied in making such forward-looking statements, including, but not limited to, factors and assumptions regarding the items previously outlined, those factors, risks and uncertainties outlined below and the assumption that none of these factors, risks and uncertainties will cause actual results or events to differ materially from those described in such forward-looking statements.

Actual results may differ materially from those expressed or implied in such statements.

Important factors, risks and uncertainties that could cause actual results to differ materially from these expectations include, among other things, the following:

• the potential adverse impact on our business and operations resulting from the current conflict between Russia and Ukraine;

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

• the challenges the Company faces as a result of the closing of the B+L IPO, including the transitional services being provided by and to Bausch + Lomb, any potential, actual or perceived conflict of interest of some of our directors and officers because of their equity ownership in Bausch + Lomb and/or because they also serve as directors or officers of Bausch + Lomb and our ability to timely consolidate the financial results of the Bausch + Lomb business;

• with respect to the Company’s B+L Separation, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the B+L Separation, the expected timing of completion of the B+L Separation and its terms, the Company’s ability to complete the B+L Separation considering the various conditions to the completion of the B+L Separation (some of which are outside the Company’s control, including conditions related to regulatory matters and applicable shareholder and stock exchange approvals), that market or other conditions are no longer favorable to completing the B+L Separation, that the previously announced planned Solta IPO has been suspended, that the Norwich Legal Decision (see “Xifaxan ® Paragraph IV Proceedings” of Note 20, “LEGAL PROCEEDINGS” to our audited Consolidated Financial Statements) may affect the timing of, or our ability to complete the B+L Separation, that applicable shareholder, stock exchange, regulatory or other approvals are not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of, or following, the B+L Separation, diversion of management time on separation transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the separation transaction, the qualification of the separation transaction as a tax-free transaction for Canadian and/or U.S.

Important factors, risks and

uncertainties that could cause actual results to differ materially from these expectations include, among other things, the following:

• the impact of current market and economic conditions in one or more of our markets on our ability to grow our business;

• the impact of inflation and other macroeconomic factors on our business and operations;

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

• with respect to the B+L Separation, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the B+L Separation, the expected timing of completion of the B+L Separation and its terms, the Company’s ability to complete the B+L Separation considering the various conditions to the completion of the B+L Separation (some of which are outside the Company’s control, including conditions related to regulatory matters and applicable shareholder and stock exchange approvals), that market or other conditions are no longer favorable to completing the B+L Separation, that a portion of Bausch Health’s ownership of Bausch + Lomb is pledged as collateral securing the 9.00% Intermediate Holdco Secured Notes, that the Norwich Legal Decision (see “Xifaxan ® Paragraph IV Proceedings” of Note 20, “LEGAL PROCEEDINGS” to our audited Consolidated Financial Statements) may affect the timing of, or our ability to complete the B+L Separation, that applicable shareholder, stock exchange, regulatory or other approvals are not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of, or following, the B+L Separation, diversion of management time on separation transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the separation transaction, the qualification of the separation transaction as a tax-free transaction for Canadian and/or U.S.

federal income tax purposes (including whether or not an advance ruling from the Canada Revenue Agency and/or the Internal Revenue Service will be sought or obtained), the ability of the Company and the separated entity to satisfy the conditions required to maintain the tax-free status of the B+L Separation (some of which are beyond their control), limitations on the Company’s ability to sell a portion of the Company’s interest in Bausch + Lomb in order to maintain the tax-free status of the B+L Separation (including due to dilution from B+L’s issuance of share-based compensation awards), other potential tax or other liabilities that may arise as a result of the B+L Separation, the potential dissynergy costs resulting from the B+L Separation, the impact of the B+L Separation on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets the Company is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting the Company’s business.

In particular, the Company can offer no assurance that any B+L Separation will occur at all, or that any such transaction will occur on the timelines anticipated by the Company;

• the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our past distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor Rx Services, LLC (“Philidor”)), including a number of pending non-class securities litigations (including certain pending opt-out actions in the U.S.

related to the previously settled securities class action and certain opt-out actions in Canada relating to the previously settled class action in

Canada), certain pending lawsuits and other claims, investigations or proceedings that may be initiated or that may be asserted;

• potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the past and ongoing public scrutiny of our past distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor;

related to the previously settled securities class action and certain opt-out actions in Canada relating to the previously settled class action in Canada), certain pending lawsuits and other claims, investigations or proceedings that may be initiated or that may be asserted;

• the past and ongoing scrutiny of our legacy business practices, including with respect to pricing, and any pricing controls or price adjustments that may be sought or imposed on our products as a result thereof;

• ongoing or potential legal and governmental proceedings that are uncertain, costly and time-consuming and could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline;

• pricing decisions that we have implemented, or may in the future elect to implement, such as the Patient Access and Pricing Committee’s historic practice of limiting the average annual price increase for our branded prescription pharmaceutical products to single digits, or any future pricing actions we may take in 2024 or beyond following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);

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and the results thereof;

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

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

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

• compliance with the legal and regulatory requirements of our marketed drugs, including our dietary products;

• our substantial debt (and potential additional future indebtedness) and current and future debt service obligations, our ability to reduce our outstanding debt levels and the resulting impact on our financial condition, cash flows and results of operations;

• our ability to comply with the financial and other covenants contained in our senior notes indentures, the 2027 Revolving Credit Facility, the 2022 Amended Credit Agreement, the B+L Credit Agreement and other current or future credit and/or debt agreements, including the ability of Bausch + Lomb to comply with its covenants and obligations under the B+L Credit Agreement, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional obligations we are able to incur pursuant to other covenants, our ability to draw under our 2027 Revolving Credit Facility, Bausch + Lomb’s ability to draw down under the revolving credit facility under the B+L Credit Agreement and restrictions on our ability to make certain investments and other restricted payments;

• any default under the terms of our senior notes indentures or the 2022 Amended Credit Agreement (and other current or future credit and/or debt agreements) and our ability, if any, to cure or obtain waivers of such default;

• our ability to comply with the financial and other covenants contained in our senior notes indentures, the 2027 Revolving Credit Facility, the 2022 Amended Credit Agreement, the AR Credit Facility and other current or future credit and/or debt agreements or amendments thereto, including the ability of Bausch + Lomb to comply with its covenants and obligations under the B+L Senior Secured Credit Facilities and the B+L October 2028 Secured Notes, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional obligations we are able to incur pursuant to other covenants, our ability to draw under our 2027 Revolving Credit Facility, Bausch + Lomb’s ability to draw down under the revolving credit facility under the B+L Credit Agreement and restrictions on our ability to make certain investments and other restricted payments;

• any default under the terms of our senior notes indentures or the 2022 Amended Credit Agreement (and other current or future credit and/or debt agreements or amendments thereto) and our ability, if any, to cure or obtain waivers of such default;

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

• any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2023 or beyond, including as a result of the impacts of the COVID-19 pandemic on our business and operations, which could lead to, among other things:

• our ability to generate cash in order to service our debt;

• any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2024 or beyond, including as a result of current market and economic conditions in one or more of our markets, which could lead to, among other things:

(i) a failure to meet the financial and/or other covenants contained in the 2022 Amended Credit Agreement, senior notes indentures and/or the B+L Credit Agreement (and other current or future credit and/or debt agreements) and/or (ii) impairment in the goodwill associated with certain of our reporting units or impairment charges related to certain of our products or other intangible assets, which impairments could be material;

• changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units or impairment charges related to certain of our products or other intangible assets;

• the uncertainties associated with the acquisition and launch of new products, assets and businesses, including, but not limited to, our ability to provide the time, resources, expertise and funds required for the commercial launch of new products, the acceptance and demand for new products, and the impact of competitive products and pricing, which could lead to material impairment charges;

• risks and uncertainties relating to the XIIDRA Acquisition by Bausch + Lomb, including its ability to effectively and efficiently integrate the acquired XIIDRA ® product, pipeline products, transferred sales force and other assets into its existing business, risks that such integration efforts will potentially divert the efforts and attention of Bausch + Lomb’s management and other employees away from its ongoing business operations, the effect of the transaction on its ability to maintain relationships with customers, suppliers, and other business partners, risks relating to Bausch + Lomb’s increased levels of debt as a result of debt incurred to finance such acquisition and risks that it may not realize the expected benefits of the acquisition on a timely basis or at all;

• the possibility that the pro forma financial information included in this Form 10-K may not necessarily be indicative of what the consolidated results of operations would have been, had the XIIDRA Acquisition been completed on January 1, 2022 and may differ materially from the future results of operations of the combined company;

• the uncertainties associated with the acquisition and launch of new products, assets and businesses (including Bausch + Lomb’s recently acquired XIIDRA ® product and Blink ® product line and its recently launched MIEBO ® product), including, but not limited to, our ability to provide the time, resources, expertise and funds required for the commercial

launch of new products, the acceptance and demand for new products, and the impact of competitive products and pricing, which could lead to material impairment charges;

• our ability or inability to extend the profitable life of our products, including through line extensions and other life-cycle programs;

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

• factors impacting our ability to stabilize and reposition our Ortho Dermatologics business to generate additional value, including the success of recently launched products and the approval of pipeline products (and the timing of such approvals);

• factors impacting our ability to stabilize and reposition our Dermatology business to generate additional value, including the success of recently launched products and the approval of pipeline products (and the timing of such approvals);

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

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

• our ability to effectively operate and grow our businesses in light of the challenges that the Company has faced and market conditions, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our past pricing and other practices, limitations on the way we conduct business imposed by the covenants contained in our 2022 Amended Credit Agreement, the B+L Credit Agreement, our senior notes indentures and the agreements governing our other indebtedness, and the impacts of the COVID-19 pandemic;

• our ability to develop or acquire more effective or less costly pharmaceutical or OTC products or medical devices than our competitors;

• our ability to effectively operate and grow our businesses in light of the challenges that the Company has faced and market conditions, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our past pricing and other practices, limitations on the way we conduct business imposed by the covenants contained in our 2022 Amended Credit Agreement, AR Facility Agreement, the B+L Senior Secured Credit Facilities, our senior notes indentures, the senior notes indenture of B+L and the agreements governing our other indebtedness, and the impacts of the COVID-19 pandemic;

• the extent to which our products are reimbursed by government authorities, pharmacy benefit managers (“PBMs”) and other third-party payors;

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

• the impact of pricing controls, social or governmental pressure to lower the cost of drugs, and consolidation across the supply chain;

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

• our ability to maintain and provide appropriate training in our products to our health care providers;

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

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

• the impact of the recent escalation in conflict in the Middle East, including attacks on Israel by Hamas and any related military conflict, including potential impact on our operations, sale of products and revenues in this region;

• the trade conflict between the U.S.

• the impact of the ongoing conflict between Russia and Ukraine and the export controls, sanctions and other restrictive actions that have been or may be imposed by the U.S., Canada, the EU and other countries against governmental and other entities in Russia, Belarus and parts of Ukraine, including potential impact on sales, earnings, market conditions and the ability of the Company to manage its resources and operations in Russia;

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

• our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property (such as in connection with the filing by Norwich Pharmaceuticals Inc.

(“Norwich”) of its Abbreviated New Drug Application (“ANDA”) for Xifaxan ® (rifaximin) 550 mg tablets and the Company’s related lawsuit filed against Norwich in connection therewith) and the impact of the Norwich Legal Decision on, among other things, our business results, financial results, and the B+L Separation;

(“Norwich”) of its Abbreviated New Drug Application (“ANDA”) for Xifaxan ® (rifaximin) 550 mg tablets and the Company’s related lawsuit filed against Norwich in connection therewith) and the impact of the Norwich Legal Decision and related litigation on, among other things, our business results, financial results, and the B+L Separation;

• our ability to successfully appeal the decision of the U.S.

District Court for the District of Delaware in the Company’s lawsuit against Norwich in connection with Norwich’s ANDA and challenge Norwich’s ability to achieve a modified ANDA that avoids the August 10, 2022 final judgement by the District Court and omits the Xifaxan ® hepatic encephalopathy (“HE”) indication and HE safety data;

• the fact that a substantial amount of our revenues are derived from the Xifaxan ® product line, and that we may be materially impacted by the entry of a generic rifaximin product earlier than January 2028, including the risk of a competitor launching a generic rifaximin at risk prior to a final unappealable decision;

District Court for the District of Delaware in the Company’s lawsuit against Norwich in connection with Norwich’s ANDA;

• the fact that a substantial amount of our revenues is derived from the Xifaxan ® product line, and that we may be materially impacted by the entry of a generic rifaximin product earlier than January 2028, including the risk of a competitor launching a generic rifaximin at risk prior to a final unappealable decision;

• the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;

• the impact on our revenues and profits from generic products as a result of changes to regulatory policy;

• our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis and the difficulties, challenges, time and resources associated with the integration of acquired companies, businesses and products;

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• our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;

• the effect of changes in inventory levels or fluctuations in buying patterns by our large distributor and retail customers;

• the disruption of delivery of our products and the routine flow of manufactured goods;

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• our ability to effectively promote our own products and those of our co-promotion partners;

• the success of our fulfillment arrangements with Walgreen Co., including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, PBMs, third-party payors and governmental agencies), and the continued compliance of such arrangements with applicable laws;

• the success of our fulfillment arrangements with Walgreen Co.

and our dermatology cash-pay prescription program, including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, PBMs, third-party payors and governmental agencies), and the continued compliance of such arrangements with applicable laws;

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

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

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

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

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

• our indemnity agreements, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material;

• the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada, European Medicines Agency and similar agencies in other countries, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

• the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada, EMA and similar agencies in other countries, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

• the results of continuing safety and efficacy studies by industry and government agencies;

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• declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;

• compliance by the Company or our third-party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S.

Foreign Corrupt Practices Act and the Canadian Corruption of Foreign Public Officials Act), worldwide economic sanctions and/or export laws, worldwide environmental laws and regulation and privacy and security regulations;

• compliance by the Company or our third-party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with applicable laws and regulations, including health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S.

Foreign Corrupt

Practices Act and the Canadian Corruption of Foreign Public Officials Act), worldwide economic sanctions and/or export laws, worldwide environmental laws and regulation and privacy and security regulations, and to prevail in any litigation related to noncompliance;

• the impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 and potential amendment thereof and other legislative and regulatory health care reforms in the countries in which we operate, including with respect to recent government inquiries on pricing;

• the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its businesses and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;

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

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

• the reduction of revenues in future fiscal periods due to our policies regarding returns, allowances, and chargebacks;

• the reduction of profits due to imports from countries where our products are available at lower prices;

• any plans for the Company’s aesthetic medical business;

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

• the impact of catastrophic events that may disrupt our business;

• risks associated with climate change;

• our ability to maintain adequate internal controls and to provide an assertion as to the effectiveness of such controls on an annual basis;

• the potential adverse effect of shareholder activism;

• our ability to effectively monitor and respond to expectations regarding environmental, social and governance matters;

• risks in Item 1A.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis