What changed in this filing

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Item 9A. Controls and Procedures

2024-02-22 compared with 2023-02-23 · 797 added, 840 removed, 2277 unchanged (42% of the section changed)

10 unchanged sentences

Based on that evaluation, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023.

In accordance with SEC staff guidance, which allows companies to exclude acquisitions from management’s report on internal control over financial reporting for the first year after acquisition, management’s evaluation and conclusion of internal control over financial reporting, as of December 31, 2023, did not include the internal controls related to the XIIDRA Acquisition, which was acquired during September 2023.

Total assets and revenues attributable to the XIIDRA Acquisition, represented approximately 1% of the Company’s consolidated assets and revenues, respectively, as of, and for the year ended December 31, 2023.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

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Other Information

Departure of Directors or Certain Officers;

Election of Directors;

Appointment of Certain Officers;

Compensation Arrangements of Certain Officers

On February 21, 2023, the Talent and Compensation Committee of the Board of Directors of the Company (the “Committee”) approved changes to the compensation of Thomas J.

Appio, the Company’s Chief Executive Officer, based on a review of market data and Mr.

Appio’s performance.

The Committee increased Mr.

Appio’s annual base salary to $1,200,000 effective February 25, 2023 and his target annual cash bonus opportunity to 125% of his base salary commencing with his 2023 bonus.

In addition, the Committee also determined that Mr.

Appio’s annual aggregate target equity incentive compensation opportunity will be set at $11,000,000 commencing with annual equity awards to be made in 2023.

For 2023, Mr.

Appio’s annual equity award will be granted in the form of performance share units (subject to achievement of performance-based vesting conditions) and service-based restricted stock units.

This amount reflects only the target value of Mr.

Appio’s annual equity incentive awards;

the actual value that may be realized by Mr.

Appio in connection with these equity incentive awards will depend on the level of achievement of the applicable performance goals and satisfaction of the applicable service-vesting conditions.

On November 6, 2023 , Ms.

Seana Carson , Executive Vice President, General Counsel of the Company, adopted a trading arrangement for the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c).

Carson’s Rule 10b5-1 Trading Plan, which is scheduled to expire on December 31, 2024, provides for the sale of up to 30% of the number of shares of Company common stock that she will receive after the tax withholding obligations due upon vesting.

The total number of shares of Company common stock subject to Ms.

Carson’s Rule 10b5-1 Trading Plan before withholding taxes is 43,303 sha res.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Number Exhibit Description

2.1 Stock and Asset Purchase Agreement by and among Bausch + Lomb Ireland Limited, Novartis Pharma AG and Novartis Finance Corporation and, for the limited purposes set forth therein, Bausch + Lomb Corporation, dated as June 30, 2023, originally filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 7, 2023, which is incorporated by reference herein.

3.1 Certificate of Continuation, dated August 9, 2013, originally filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 13, 2013, which is incorporated by reference herein.

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and the Bank of New York Mellon, as trustee, amending that certain Indenture dated as of May 23, 2019 relating to the Company’s 7.250% Senior Notes due 2029, originally filed as 10.8 to the Company’s Current Report on Form 10-Q filed on November 3, 2022, which is incorporated by reference herein.

4.23 Indenture, dated as of September 29, 2023, by and among Bausch + Lomb Corporation, the guarantors party thereto and Citibank, N.A., acting through its agency and trust division, as trustee, and as notes collateral agent thereto, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 29, 2023 and incorporated by reference herein.

10.1 Bausch Health Companies Inc.

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Gordon dated as of January 3, 2022, originally filed as Exhibit 10.21 to Bausch + Lomb Corporation’s Registration Statement on Form S-1 filed on April 28, 2022, which is incorporated by reference herein.

10.53 Form of PSU Award Agreement, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 10-Q filed on May 4, 2023, which is incorporated by reference herein.

10.54 Credit and Security Agreement, dated June 30, 2023, by and among Bausch Receivables Funding LP, as Borrower, Bausch Receivables Funding GP ULC, Bausch Health US, LLC, as the Master Servicer, GLAS USA LLC, as Administrative Agent, GLAS Americas LLC, as Collateral Agent, KKR Capital Markets LLC, as Left Lead Arranger, KKR Credit Advisors (US) LLC, as Structuring Advisor, and the Lenders from time to time party thereto, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 7, 2023, which is incorporated by reference herein.

10.55 First Amendment to Credit and Security Agreement, dated as of August 9, 2023, amending the Credit and Security Agreement, dated June 30, 2023, by and among Bausch Receivables Funding LP, as Borrower, Bausch Receivables Funding GP ULC, Bausch Health US, LLC, as the Master Servicer, GLAS USA LLC, as Administrative Agent, GLAS Americas LLC, as Collateral Agent, KKR Capital Markets LLC, as Left Lead Arranger, KKR Credit Advisors (US) LLC, as Structuring Advisor, and the Lenders from time to time party thereto.*

10.56 Credit Agreement, dated as of May 10, 2022, as amended by the First Incremental Amendment, dated as of September 29, 2023, by and among Bausch + Lomb Corporation, certain subsidiaries of Bausch + Lomb Corporation as subsidiary guarantors, the lenders party thereto, Citibank, N.A., as collateral agent thereto, Goldman Sachs Bank USA, as term facility administrative agent thereto and JPMorgan Chase Bank, N.A., as first incremental term facility administrative agent thereto, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 29, 2023, which is incorporated by reference herein.

10.57 Bausch Health Companies Inc.

2014 Omnibus Incentive Plan (As Amended and Restated, Effective as of May 16, 2023), originally filed as Exhibit B to the Company’s definitive proxy statement (File No.

001-14956) filed on April 6, 2023, which is incorporated by reference herein.

21.1* Subsidiaries of Bausch Health Companies Inc.

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§ 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97* Bausch Health Companies Inc.

Compensation Recoupment Policy dated as of July 20, 2023*†

101.INS* Inline XBRL Instance Document

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Chief Executive Officer and Director February 22, 2024

Executive Vice President,

Chief Financial Officer

(Principal Financial Officer) February 23, 2023

Senior Vice President, Controller and

Chief Accounting Officer (Principal Accounting Officer) February 23, 2023

Senior Vice President, Controller, and Chief Accounting Officer

Interim Chief Financial Officer

(Principal Financial and Accounting Officer) February 22, 2024

Chairperson of the Board, Director February 22, 2024

/s/ RICHARD U.

Director February 23, 2023

/s/ BRETT ICAHN

Director February 22, 2024

/s/ ARGERIS N.

Director February 22, 2024

Director February 23, 2023

/s/ STEVEN D.

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Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023, 2022 and 2021 F- 8

Consolidated Statements of Shareholders’ Equity (Deficit) for the years ended December 31, 2022, 2021 and 2020 F- 9

Consolidated Statements of Shareholders’ (Deficit) Equity for the years ended December 31, 2023, 2022 and 2021 F- 9

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 F- 10

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

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of comprehensive loss, of shareholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive loss, of shareholders' (deficit) equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded the XIIDRA Acquisition (“XIIDRA”) from its assessment of internal control over financial reporting as of December 31, 2023, because it was acquired by the Company in a purchase business combination during 2023.

We have also excluded XIIDRA from our audit of internal control over financial reporting.

XIIDRA is a wholly-owned business whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 1% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Definition and Limitations of Internal Control over Financial Reporting

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

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

(ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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

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Professionals with specialized skill and knowledge were used to assist in evaluating whether the Company’s Medicaid rebate program policies and methodology for estimating Medicaid rebates are compliant with the Center for Medicare and Medicaid Services (CMS) and federal regulations.

Goodwill Impairment Assessments – Ortho Dermatologics, Vision Care, Ophthalmic Pharmaceuticals, Surgical and Neurology and Other Reporting Units

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $11,547 million as of December 31, 2022, and the goodwill associated with the Ortho Dermatologics reporting unit, the Bausch + Lomb segment, and the Neurology and Other reporting unit was $480 million, $5,246 million, and $1,439 million, respectively.

The Bausch + Lomb segment consists of the Vision Care, Ophthalmic Pharmaceuticals, and Surgical reporting units.

Goodwill Impairment Assessments – Dermatology, Neurology, Generics, Vision Care, Pharmaceuticals, and Surgical Reporting Units

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $11,183 million as of December 31, 2023, and the goodwill associated with the Dermatology reporting unit, the Neurology reporting unit, the Generics reporting unit, and the Bausch + Lomb segment was $329 million, $1,177 million, $227 million and $5,314 million, respectively.

The Bausch + Lomb segment consists of the Vision Care, Pharmaceuticals, and Surgical reporting units.

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

An interim goodwill impairment test in advance of the annual impairment assessment may be required if events occur that indicate an impairment might be present.

Where the qualitative assessment suggested that it was more likely than not that the fair value of a reporting

unit was less than its carrying amount, a quantitative fair value test was performed for that reporting unit.

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

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

Goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value.

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

During the first, second and third quarters of 2022, increased interest rates and other macroeconomic factors suggested the fair value of the Ortho Dermatologics reporting unit could be less than its carrying value, and therefore, quantitative fair value tests were performed, resulting in no impairment to goodwill as of March 31, 2022, and the recognition of goodwill impairments of $83 million and $119 million as of June 30, 2022 and September 30, 2022, respectively.

In addition, during the second quarter of 2022, the equity and bond markets were negatively impacted by various macroeconomic and geopolitical factors, and therefore, separate quantitative fair value tests were performed for the Vision Care, Ophthalmic Pharmaceuticals, and Surgical reporting units of the Bausch + Lomb segment, resulting in no impairment to goodwill as of June 30, 2022.

During the annual goodwill impairment test as of October 1, 2022, management performed separate quantitative fair value tests for the Neurology and Other, Vision Care, Ophthalmic Pharmaceuticals, and Surgical reporting units.

As a result of revisions to long-term expectations to reflect changes in payer demands, health care legislation, and other regulations for the Neurology and Other reporting unit, management determined goodwill was impaired and the Company recognized a goodwill impairment of $622 million for the Neurology and Other reporting unit.

Utilizing the most recent cash flow projections to reflect current market conditions and current trends in business performance for the Vision Care, Ophthalmic Pharmaceuticals, and Surgical reporting units, management determined there was no impairment to goodwill.

During the third quarter of 2023, as a result of lower realized pricing, discontinuation of certain products as a result of impact of recent legislation, revised expectations of future selling, advertising, and promotion costs to mitigate further revenue erosion, and increases in market interest rates, management determined that the fair value of the Dermatology reporting unit could be less than its carrying value, and therefore, a quantitative fair value test was performed, resulting in the recognition of a goodwill impairment of $151 million.

In addition, during the same quarter, as a result of changing market dynamics driven by recent legislation, changes to the future expected commercial insurance coverage for certain key products, a projected shift in the channels of business, and increases in market interest rates, management determined that the fair value of the Neurology reporting unit could be less than its carrying amount, and therefore, a quantitative fair value test was performed, resulting in the recognition of a goodwill impairment of $251 million.

During the annual goodwill impairment test as of October 1, 2023, management performed separate quantitative fair value tests for the Generics, Vision Care, Pharmaceuticals, and Surgical reporting units.

As a result of revisions to long-term forecasts to reflect shifting market dynamics that management expects to intensify in the future, including increased competition with respect to generic pharmaceuticals which impacts both pricing and potential market share, the carrying value of the Generics reporting unit exceeded its fair value and the Company recognized a goodwill impairment of $91 million for the Generics reporting unit.

For the Vision Care, Surgical, and Pharmaceuticals reporting units, the fair value exceeded the carrying value and therefore, management determined there was no impairment to goodwill.

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

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the Ortho Dermatologics, Vision Care, Ophthalmic Pharmaceuticals, Surgical, and Neurology and Other reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units;

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the Dermatology, Neurology, Generics, Vision Care, Pharmaceuticals, and Surgical reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, discount rates, and terminal growth rates for the Dermatology, Neurology, Generics, and Surgical reporting units and revenue growth rates and discount rates for the Vision Care and Pharmaceuticals reporting units;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Ortho Dermatologics, Vision Care, Ophthalmic Pharmaceuticals, Surgical, and Neurology and Other reporting units.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Ortho Dermatologics, Vision Care, Ophthalmic Pharmaceuticals, Surgical, and Neurology and Other reporting units;

(ii) evaluating the appropriateness of the discounted cash flow model;

(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Dermatology, Neurology, Generics, Vision Care, Pharmaceuticals, and Surgical reporting units.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting units;

(ii) evaluating the appropriateness of the discounted cash flow model used by management;

(iii) testing the completeness and accuracy of certain of the underlying data used in the discounted cash flow model;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, discount rates, and terminal growth rates.

Evaluating management’s significant assumptions related to revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units;

Evaluating management’s assumptions related to revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s discounted cash flow model and (ii) the reasonableness of the discount rates and terminal growth rates significant assumptions.

Interim Finite-Lived Intangible Assets and Goodwill Impairment Assessments - Xifaxan ® Finite-Lived Intangible Assets and Salix Reporting Unit

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s finite-lived intangible assets associated with Xifaxan ® and goodwill associated with the Salix reporting unit was $2,693 million and $3,159 million, respectively, as of December 31, 2022.

Xifaxan ® represents approximately 80% of the Salix reporting unit’s revenue.

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

Both goodwill and finite-lived intangible assets are tested for impairment if events occur that indicate an impairment might be present.

If indicators of impairment are present, impairment is measured by the amount the carrying value exceeds the fair value.

During the third quarter of 2022, a court held, that among other findings, that certain U.S.

patents protecting the composition and use of Xifaxan ® were invalid (the “Norwich Legal Decision”).

The ultimate outcome of this decision and other potential future related developments could impact the timing and extent of future revenues and cash flows associated with Xifaxan ® .

Therefore, management performed an assessment of the Xifaxan ® finite-lived intangible assets and the Salix reporting unit’s goodwill for potential impairment, resulting in no impairment as of September 30, 2022.

Management performed the assessments of the Xifaxan ® finite-lived intangible assets and Salix reporting unit using a probability-weighted undiscounted and discounted cash flow analyses, respectively.

Management’s probability-weighted undiscounted and discounted cash flow analyses have a base case and different scenarios representing a range of different outcomes which address the timing of loss of exclusivity for Xifaxan ® .

Management assigned a probability weighting to each scenario and calculated a weighted average of the valuations

derived from the undiscounted and discounted cash flows under each scenario.

Management’s probability-weighted undiscounted cash flow analysis for valuing the Xifaxan ® finite-lived intangible assets also relies on assumptions regarding revenue growth rates, gross profit, selling, general and administrative expenses, and research and development expenses.

Management’s probability-weighted discounted cash flow analysis for valuing the Salix reporting unit also relies on assumptions regarding revenue growth rates, gross profit, projected working capital needs, selling, general and administrative expenses, research and development expenses, capital expenditures, income tax rate, discount rate and terminal growth rate.

The principal considerations for our determination that performing procedures relating to the interim finite-lived intangible assets and goodwill impairment assessments of the Xifaxan ® finite-lived intangible assets and Salix reporting unit is a critical audit matter are (i) the significant judgment by management when developing the undiscounted cash flows associated with the Xifaxan ® finite-lived intangible assets and when developing the fair value of the Salix reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the probability weighting assigned to each scenario to address the estimated timing of the potential loss of exclusivity for the Xifaxan ® product and in evaluating management’s significant assumptions related to revenue growth rates used in developing the undiscounted cash flows for the Xifaxan ® finite-lived intangible assets and fair value of the Salix reporting unit and the discount rate and terminal growth rate used in developing the fair value of the Salix reporting unit;

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rate and terminal growth rate assumptions.

XIIDRA Acquisition - Valuation of a Product Brand

As described in Note 3 to the consolidated financial statements, on September 29, 2023, the Company consummated the XIIDRA acquisition for an aggregate consideration of approximately $1,753 million.

Of the intangible assets acquired, $1,595 million of product brand was recorded.

The fair value of the identifiable intangible asset was determined using the income

approach, which requires a forecast of the expected future cash flows, including revenue growth rates, cost of goods sold, operating expenses, and discount rate.

The principal considerations for our determination that performing procedures relating to the valuation of the product brand acquired in the XIIDRA acquisition is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the acquired product brand;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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

These procedures included testing the effectiveness of controls relating to management’s finite-lived intangible assets and goodwill impairment assessments, including controls over the valuation of the Xifaxan ® finite-lived intangible assets and Salix reporting unit.

These procedures also included, among others (i) testing management’s process for developing the undiscounted cash flows associated with the Xifaxan ® finite-lived intangible assets and developing the fair value of the Salix reporting unit;

(ii) evaluating the appropriateness of the probability-weighted undiscounted and discounted cash flow analyses;

(iii) testing the completeness and accuracy of underlying data used in the undiscounted and discounted cash flow analyses;

and (iv) evaluating the reasonableness of the probability weighting assigned to each scenario to address the estimated timing of the potential loss of exclusivity for the Xifaxan ® product and management’s significant assumptions related to revenue growth rates used in developing the undiscounted cash flows for the Xifaxan ® finite-lived intangible assets and fair value of the Salix reporting unit and the discount rate and terminal growth rate used in developing the fair value the Salix reporting unit.

Evaluating the reasonableness of the probability weighting assigned to each scenario to address the estimated timing of the potential loss of exclusivity involved considering (i) the consistency with reports issued by investment analysts related to the timing of when a generic version of Xifaxan ® could potentially launch;

(ii) the consistency with internal and external briefings;

and (iii) whether the estimated timing of the potential loss of exclusivity was consistent with evidence obtained in other areas of the audit.

Evaluating management’s significant assumptions related to revenue growth rates for the Xifaxan ® finite-lived intangible assets and Salix reporting unit involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Xifaxan ® product line and Salix reporting unit;

These procedures included testing the effectiveness of controls relating to acquisition accounting, including controls over management’s valuation of the product brand.

These procedures also included, among others, (i) reading the stock and asset purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the product brand;

(iii) evaluating the appropriateness of the income approach used by management;

(iv) testing the completeness and accuracy of the underlying data used by management in the income approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, cost of goods sold, operating expenses, and discount rate.

Evaluating management’s assumptions related to revenue growth rates, cost of goods sold, and operating expenses involved considering (i) the current and past performance of XIIDRA;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s probability-weighted discounted cash flow analyses and (ii) the reasonableness of the discount rate and terminal growth rate significant assumptions for the Salix reporting unit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income approach and (ii) the reasonableness of the discount rate assumption.

/s/ PricewaterhouseCoopers LLP

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Commitments and contingencies (Notes 20 and 21)

Equity (Deficit)

(Deficit) Equity

Common shares, no par value, unlimited shares authorized, 365,238,917 and 361,898,846 issued and outstanding at December 31, 2023 and 2022, respectively

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Noncontrolling interest 940 952

Total equity (deficit) 260 ( 34 )

Total liabilities and equity (deficit) $ 25,686 $ 29,202

Total (deficit) equity ( 82 ) 260

Total liabilities and (deficit) equity $ 27,350 $ 25,686

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

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Net loss ( 611 ) ( 212 ) ( 937 )

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

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

Net loss attributable to Bausch Health Companies Inc.

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Foreign currency translation adjustment 170 ( 257 ) ( 158 )

Other comprehensive loss ( 256 ) ( 130 ) ( 45 )

Other comprehensive income (loss) 170 ( 256 ) ( 130 )

Comprehensive loss ( 441 ) ( 468 ) ( 1,067 )

Comprehensive income attributable to noncontrolling interest ( 26 ) ( 12 ) ( 3 )

Comprehensive loss (income) attributable to noncontrolling interest 24 ( 26 ) ( 12 )

Comprehensive loss attributable to Bausch Health Companies Inc.

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BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

(in millions)

Bausch Health Companies Inc.

Shareholders’ Equity

Shareholders’ (Deficit) Equity

Common Shares Accumulated

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Balance, January 1, 2021 355.4 $ 10,227 $ 454 $ ( 8,013 ) $ ( 2,133 ) $ 535 $ 70 $ 605

Effect of application of new accounting standard:

financial instruments - credit losses — — — ( 1 ) — ( 1 ) — ( 1 )

Common shares issued under share-based compensation plans 4.0 90 ( 68 ) — — 22 — 22

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Employee withholding taxes related to share-based awards — — ( 52 ) — — ( 52 ) — ( 52 )

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

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

Net (loss) income — — — ( 948 ) — ( 948 ) 11 ( 937 )

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

Other comprehensive (loss) income — — — — ( 131 ) ( 131 ) 1 ( 130 )

Balance, December 31, 2021 359.4 10,317 462 ( 8,961 ) ( 1,924 ) ( 106 ) 72 ( 34 )

Proceeds from B+L initial public offering, net of costs (Note 2) — — ( 327 ) — 137 ( 190 ) 865 675

Common shares issued under share-based compensation plans 2.5 74 ( 71 ) — — 3 — 3

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Employee withholding taxes related to share-based awards — — ( 31 ) — — ( 31 ) — ( 31 )

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

Noncontrolling interest distributions — — — — — — ( 11 ) ( 11 )

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Balance, December 31, 2022 361.9 10,391 159 ( 9,186 ) ( 2,056 ) ( 692 ) 952 260

Proceeds from B+L initial public offering, net of costs (Note 2) — — ( 327 ) — 137 ( 190 ) 865 675

Common shares issued under share-based compensation plans 3.3 32 ( 32 ) — — — — —

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Employee withholding taxes related to share-based awards — — ( 24 ) — — ( 24 ) — ( 24 )

Vesting of B+L equity compensation — — ( 21 ) — — ( 21 ) 21 —

Noncontrolling interest distributions — — — — — — ( 9 ) ( 9 )

Net (loss) income — — — ( 225 ) — ( 225 ) 13 ( 212 )

Other comprehensive (loss) income — — — — ( 269 ) ( 269 ) 13 ( 256 )

Net loss — — — ( 592 ) — ( 592 ) ( 19 ) ( 611 )

Other comprehensive income (loss) — — — — 175 175 ( 5 ) 170

Balance, December 31, 2023 365.2 $ 10,423 $ 214 $ ( 9,778 ) $ ( 1,881 ) $ ( 1,022 ) $ 940 $ ( 82 )

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Gain excluded from hedge effectiveness ( 13 ) ( 6 ) ( 20 )

(Gain) loss on extinguishment of debt ( 875 ) 62 59

Gain on extinguishment of debt ( 1 ) ( 875 ) 62

Third party fees paid in connection with the Exchange Offer ( 2 ) ( 34 ) —

Payments of contingent consideration adjustments, including accretion ( 10 ) ( 2 ) ( 16 )

Amortization of interim contract and inventory step-up resulting from acquisitions 23 — —

Foreign exchange and other 41 3 ( 35 )

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Accounts payable, accrued and other liabilities 158 ( 75 ) 121

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

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

Cash Flows From Investing Activities

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Other ( 11 ) ( 11 ) 10

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

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

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

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

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

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

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Bausch Health Companies Inc.

(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 approximately 89 % 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” 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” or “B+L”), branded, and branded generic pharmaceuticals, OTC products and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment) in the therapeutic areas of eye health.

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

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Separation of the Bausch + Lomb Eye Health Business

On August 6, 2020, the Company announced its intentions to separate its eye health business into an independent publicly traded entity from the remainder of Bausch Health (the “B+L Separation”).

In January 2022, the Company completed the internal organizational design and structure of the new eye health entity, Bausch + Lomb, as previously announced.

The registration statement related to the initial public offering (“IPO”) of Bausch + Lomb (the “B+L IPO”) was declared effective on May 5, 2022, 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, Bausch + Lomb was an indirect wholly-owned subsidiary of the Company.

On May 10, 2022, a wholly owned subsidiary of the Company (the “Selling Shareholder”) sold 35,000,000 common shares of Bausch + Lomb, at an offering price of $ 18.00 per share, pursuant to the B+L IPO.

In addition, the Selling Shareholder granted the underwriters an option for a period of 30 days from the date of the B+L IPO to purchase up to an additional 5,250,000 common shares to cover over-allotments at the IPO price less underwriting commissions.

On May 31, 2022, the underwriters partially exercised the over-allotment option granted by the Selling Shareholder and, on June 1, 2022, the Selling Shareholder sold an additional 4,550,357 common shares of Bausch + Lomb at an offering price of $ 18.00 per share (less applicable underwriting discount).

The remainder of the over-allotment option granted to the underwriters expired.

Upon the closing of the B+L IPO and after giving effect to the partial exercise of the over-allotment option, Bausch Health indirectly holds 310,449,643 Bausch + Lomb common shares, which represent approximately 89 % of Bausch + Lomb’s outstanding common shares.

The aggregate net proceeds from the B+L IPO and the partial exercise of the over-allotment option by the underwriters, after deducting underwriting commissions were approximately $ 675 million.

The Company continues to believe that completing the B+L Separation 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.

On August 6, 2020, the Company announced its plan to separate its eye health business, consisting of its 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, Bausch + Lomb was an indirect wholly-owned subsidiary of Bausch Health.

On May 10, 2022, a wholly owned subsidiary of 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 Bausch + Lomb’s outstanding common shares as of December 31, 2023.

The completion of the full B+L Separation, which includes the transfer of all or a portion of the Company’s remaining direct or indirect equity interest in Bausch + Lomb to its shareholders (the “Distribution”), is subject to the achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals.

The Company continues to evaluate all factors and considerations related to completing the B+L Separation, including the effect of the Norwich Legal Decision (see “ Xifaxan ® Paragraph IV Proceedings ” of Note 20, “LEGAL PROCEEDINGS”) on the B+L Separation.

The B+L IPO established two separate companies that include:

(i) a diversified pharmaceutical company which includes the Company’s Salix, International, Diversified (dentistry, neurology, medical dermatology and generic pharmaceutical) products, and Solta aesthetic medical device businesses and (ii) a fully integrated eye health company which consists of the Bausch + Lomb Vision Care, Surgical and Ophthalmic Pharmaceuticals businesses.

(i) a diversified pharmaceutical company comprised of the Salix, International, Diversified (dentistry, neurology, dermatology and generics pharmaceutical), and Solta Medical aesthetic medical device businesses and (ii) a fully integrated eye health company which consists of the Bausch + Lomb Vision Care, Surgical and Pharmaceuticals businesses.

Other than the effects of the B+L IPO described above, these audited Consolidated Financial Statements do not include any adjustments to give effect to the B+L Separation.

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On August 3, 2021, the Company announced its intentions to conduct an IPO of its aesthetic medical device business, Solta Medical (formerly Global Solta) (the “Solta IPO”).

In January 2022, the Company completed the internal organizational design and structure of the new Solta Medical entity, Solta Medical Corporation (“Solta” or “Solta Medical”).

On June 16, 2022, as a result of challenging market conditions and other factors, the Company announced it was suspending its plans for the Solta IPO.

Solta will remain part of Bausch Health, as the Company plans to revisit alternate paths for its Solta medical aesthetic devices business.

Impacts of COVID-19 Pandemic

The unprecedented nature of the COVID-19 pandemic has had, and continues to have, an adverse impact on 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, facilities closures and production suspensions.

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

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

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

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

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

In January 2022, the Company completed the internal organizational design and structure of the new Solta Medical entity, Solta Medical Corporation (“Solta Medical”).

On June 16, 2022, as a result of challenging market conditions and other factors, the Company announced it was suspending its plans for the Solta IPO and Solta Medical will remain part of Bausch Health.

Use of Estimates

In preparing the Company’s Consolidated Financial Statements, management is required to make estimates and assumptions.

This includes estimates and assumptions regarding the nature, timing and extent of the impacts that the COVID-19 pandemic will have on its operations and cash flows.

This includes estimates and assumptions regarding the nature, timing and extent of certain global macroeconomic conditions, including, but not limited to, those related to inflation and supply chain, will have on its operations and cash flows.

The estimates and assumptions used by the Company affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

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expected future cash flows used in evaluating intangible assets for impairment, assessing compliance with debt covenants and making going concern assessments;

reporting unit fair values for testing goodwill for impairment and allocating goodwill to new reporting unit structure on a relative fair value basis;

reporting unit fair values for testing goodwill for impairment and allocating goodwill to new reporting unit structures on a relative fair value basis;

provisions for loss contingencies;

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fair value of foreign currency exchange contracts;

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

and the recognition of the fair value of assets and liabilities acquired in a business combination or asset acquisition.

Under certain product manufacturing and supply agreements, management uses information from the Company’s commercialization counterparties to arrive at estimates for future returns, rebates and chargebacks.

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If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized.

In an asset acquisition, the amount allocated to acquired IPR&D with no alternative future use is charged to expense at the acquisition date and any future contingent consideration is not recorded until it becomes probable.

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.

Fair Value of Financial Instruments

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

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

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

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

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

These inputs included:

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dollar and (iii) the credit risk rating for each applicable counterparty.

The net change in fair value of cross-currency swaps is reported as a gain or loss in the Consolidated Statements of Comprehensive Income (Loss) as part of Foreign currency translation adjustment to the extent they are effective, and remain in Accumulated other comprehensive loss until either the sale or complete, or substantially complete, liquidation of the subsidiary.

comprehensive loss until either the sale or complete, or substantially complete, liquidation of the subsidiary.

No portion of the cross-currency swaps was ineffective.

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Cash deposited at banks may exceed the amount of insurance provided on such deposits.

Generally, these cash deposits may be redeemed upon demand and are maintained with financial institutions with

reputable credit and therefore bear minimal credit risk.

Generally, these cash deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk.

The Company seeks to mitigate such risks by spreading its risk across multiple counterparties and monitoring the risk profiles of these counterparties.

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The Company monitors economic conditions, including volatility associated with international economies, and related impacts on the relevant financial markets and its business, especially in light of sovereign credit issues.

The credit and economic conditions within Argentina, Belarus, Brazil, Greece, Russia, Serbia, South Africa, Turkey, Ukraine and Venezuela have been weak in recent years.

The credit and economic conditions within Algeria, Argentina, Belarus, Brazil, Greece, Iran, Russia, Serbia, South Africa, Turkey, Ukraine and Venezuela have been weak in recent years.

These conditions have increased, and may continue to increase, the average length of time that it takes to collect on the Company’s trade receivables outstanding in these countries.

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wholesaler customers accounted for approximately 46 % of net trade receivables.

In addition, as of December 31, 2022 and 2021, the Company’s net trade receivable balance from Argentina, Belarus, Brazil, Greece, Russia, Serbia, South Africa, Turkey, Ukraine and Venezuela amounted to $ 136 million and $ 78 million, respectively, the majority of which is current or less than 90 days past due.

In addition, as of December 31, 2023 and 2022, the Company’s net trade receivable balance from Algeria, Argentina, Belarus, Brazil, Greece, Iran, Russia, Serbia, South Africa, Turkey, Ukraine and Venezuela amounted to $ 144 million and $ 136 million, respectively, the majority of which is current or less than 90 days past due.

The portion of the net trade receivable from these countries that is past due more than 90 days amounted to $ 2 million, as of December 31, 2023, a portion of which is comprised of public hospitals.

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Balance, beginning of period $ 33 $ 35 $ 39

Retrospective effect of application of new accounting standard — — 1

Provision for expected credit losses 5 5 ( 2 )

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Buildings and improvements Up to 40 years

Machinery and equipment 3 - 20 years

Machinery and equipment Up to - 20 years

Other equipment 3 - 10 years

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Debt Discounts and Premiums, Issuance Costs and Deferred Financing Costs

Debt discounts and issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from or addition to the carrying amount of the related debt and are amortized or accreted, using the effective interest method, as interest expense over the contractual lives of the related credit facilities or notes.

Deferred financing costs associated with revolving credit facility arrangements are included in the balances of Prepaid expenses and other current assets and Other non-current assets in the Consolidated Balance Sheets and are amortized as interest expense over the contractual life of the related revolving credit facility.

The carrying value of modified debt accounted for as a troubled debt restructuring consists of all future undiscounted cash flows, both principal and contractual future interest, associated with such debt.

The excess of the carrying value over the principal amount of such debt is recorded as a premium and is reduced as stated interest payments are made on such debt.

Debt discounts and premiums, issuance costs are presented in the Consolidated Balance Sheets as a direct deduction from or addition to the carrying amount of the related debt and are amortized or accreted, using the effective interest method, as interest expense over the contractual lives of the related credit facilities or notes.

Deferred financing costs associated with

revolving credit facility arrangements are included in the balances of Prepaid expenses and other current assets and Other non-current assets in the Consolidated Balance Sheets and are amortized as interest expense over the contractual life of the related revolving credit facility.

The Company accounts for exchanges of debt in accordance with Accounting Standards Codifications 470-60 which has resulted in certain debt being carried at a premium relative to its principal amount as well as a portion of contractual interest cost being recorded as a reduction of that premium rather than as interest expense.

Foreign Currency Translation

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

The following table presents the activity and ending balances of the Company’s variable consideration provisions the years 2022 and 2021.

The following table presents the activity and ending balances of the Company’s variable consideration provisions for the years 2023 and 2022.

(in millions) Discounts

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The Company is required to make subjective judgments based primarily on its evaluation of current market conditions and trade inventory levels related to the Company’s products.

These judgments include the potential impact of the COVID-19 pandemic on, among other things, unemployment and related changes in customer health insurance levels, customer behaviors during the COVID-19 pandemic and government stimulus bills that focus on ensuring availability and access to lifesaving drugs during a public health crisis.

These judgments include the potential impact of macroeconomic factors on, among other things, unemployment and related changes in customer health insurance levels, customer behaviors during the COVID-19 pandemic and government stimulus bills that focus on ensuring availability and access to lifesaving drugs during a public health crisis.

This evaluation may result in an increase or decrease in the experience rate that is applied to current and future sales, or require an adjustment related to past sales, or both.

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These actions have had the effect of improving sales return experience, primarily related to branded and generic products.

Sales return provisions for 2022 and 2021 were $ 131 million in each period, and include reductions in variable consideration for sales return provisions related to past sales of approximately $ 21 million and $ 28 million, respectively.

Sales return provisions for 2023 and 2022 were $ 146 million and $ 131 million, respectively.

Rebates and Chargebacks

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The amount of Managed Care, Medicaid and other rebates and chargebacks has become more significant as a result of a combination of deeper discounts implemented in each of the last three years, changes in the Company’s product mix and increased Medicaid utilization due to expansion of government funding for these programs.

Management’s estimate for rebates and chargebacks may be impacted by a number of factors, but the principal factor relates to the level of inventory in the distribution channel.

Management’s estimate for chargebacks may be impacted by a number of factors, but the principal factor relates to the level of inventory in the distribution channel.

Rebate provisions are based on factors such as timing and terms of plans under contract, time to process rebates, product pricing, sales volumes, amount of inventory in the distribution channel and prescription trends.

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Patient Co-Pay Assistance programs, Consumer Rebates and Loyalty Programs are rebates offered on many of the Company’s products.

Patient Co-Pay Assistance Programs are patient discount programs offered in the form of coupon cards or point of sale discounts, with which patients receive certain discounts off their prescription at participating pharmacies, as defined by the specific product program.

Patient Co-Pay Assistance Programs are patient discount programs offered in the form of coupon

cards or point of sale discounts, with which patients receive certain discounts off their prescription at participating pharmacies, as defined by the specific product program.

An accrual for these programs is established, equal to management’s estimate of the discount, rebate and loyalty incentives attributable to a sale.

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The Company sells products primarily to wholesalers, and in some instances to large pharmacy chains such as CVS and Walmart.

The Company has Distribution Services Agreements (“DSAs”) with several large wholesale customers such as McKesson Corporation, AmerisourceBergen Corporation, Cardinal Health, Inc.

The Company has Distribution Services Agreements (“DSAs”) with several large wholesale customers such as McKesson Corporation, Cencora Inc.

(formerly AmerisourceBergen Corporation), Cardinal Health, Inc.

and McKesson Specialty.

Under the DSAs, the wholesalers agree to provide services, and the Company pays the contracted DSA distribution service fees for these services based on product volumes.

Additionally, price appreciation credits are generated when the Company increases a

product’s wholesaler acquisition cost (“WAC”) under contracts with certain wholesalers.

Additionally, price appreciation credits are generated when the Company increases a product’s wholesaler acquisition cost (“WAC”) under contracts with certain wholesalers.

Under such contracts, the Company is entitled to credits from such wholesalers for the impact of that WAC increase on inventory currently on hand at the wholesalers.

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(i) imputed interest during the period on the lease liability determined using the effective interest rate method plus (ii) amortization of the right-of-use asset for that period.

Amortization of the right-of-use asset during the period is calculated as the difference between the straight-line expense and the imputed interest on the lease liability for that period.

Amortization of the right-

of-use asset during the period is calculated as the difference between the straight-line expense and the imputed interest on the lease liability for that period.

Variable lease expense is recognized when the achievement of the specific target is considered probable.

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Interest expense includes standby fees, the amortization of debt discounts and deferred financing costs, accretion of debt premiums and the amortization of amounts excluded from the assessment of effectiveness related to the Company’s cross-currency swaps.

Interest costs are expensed as incurred, except to the extent such interest is related to construction in progress, in which case interest is capitalized.

Interest expense is generally expensed as incurred.

Therefore, interest expense recorded in the Company’s consolidated financial statements differs significantly from the contractual interest rates of the debt subject to this accounting treatment.

To the extent interest is related to construction in progress, interest is capitalized.

Capitalized interest related to construction in progress as of December 31, 2023 and 2022 was $ 71 million and $ 66 million, respectively, and is included in Property, plant and equipment, net.

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Comprehensive loss

Comprehensive loss comprises Net loss and Other comprehensive loss.

Other comprehensive loss includes items such as foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale and other investments and certain pension and other postretirement benefit plan adjustments.

Comprehensive loss comprises Net loss and Other comprehensive income (loss).

Other comprehensive income (loss) includes items such as foreign currency translation adjustments, unrealized holding gains and losses on available-for-sale and other investments and certain pension and other postretirement benefit plan adjustments.

Accumulated other comprehensive loss is recorded as a component of shareholders’ equity.

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

Adoption of New Accounting Standards

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

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

The guidance was effective for the Company beginning January 1, 2020 and was applied using a modified retrospective approach through a cumulative-effect adjustment to accumulated deficit, which resulted in an increase to Accumulated deficit of less than $ 1 million.

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

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

The guidance was effective for annual periods ending after December 15, 2020.

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

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

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

The guidance was effective for the Company beginning January 1, 2021.

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

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

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

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

The optional amendments are effective for all entities

as of March 12, 2020, through December 31, 2024.

For the years presented, the Company has not entered into any contract modifications in which the optional expedients were applied.

New Accounting Standards

There were no new accounting standards adopted during 2023.

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disclosures of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

The enhanced income tax related disclosures required by ASU 2023-09 are effective for the Company beginning with its 2025 annual report.

Early adoption is permitted.

The Company is evaluating the impact of adoption of this guidance on its disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

The amendments in ASU 2023-07 are effective for the Company beginning with its 2024 annual report, and its interim periods beginning in 2025.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this ASU on its disclosures.

ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE

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

Paragon BioTeck, Inc.

On November 21, 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.

The acquisition of Paragon Bioteck has been accounted for as an asset acquisition.

The primary assets in the transaction, the trademarks, represented substantially all of the fair value of the gross assets acquired.

There are no future sales milestones associated with this transaction.

Total Titanium

Bausch + Lomb Acquisitions

Acquisition of XIIDRA ®

On June 30, 2023, a wholly owned subsidiary of Bausch + Lomb, Bausch + Lomb Ireland Limited, entered into a Stock and Asset Purchase Agreement (the “Acquisition Agreement”) with Novartis Pharma AG and Novartis Finance Corporation (together with Novartis Pharma AG, “Novartis”) and, solely for purposes of guaranteeing certain obligations of the acquiring entity under the Acquisition Agreement, Bausch + Lomb, to acquire XIIDRA ® (lifitegrast ophthalmic solution) and certain other ophthalmology assets (the “XIIDRA Acquisition”).

On September 29, 2023, under the terms of the Acquisition Agreement, Bausch + Lomb, through its affiliate, consummated the XIIDRA Acquisition for:

(i) an upfront cash payment of $ 1,750 million, (ii) the assumption of certain pre-existing milestone payments and (iii) potential future milestone obligations of up to $ 750 million, as discussed below.

The strategic XIIDRA Acquisition is expected to complement Bausch + Lomb’s existing dry eye franchise that includes eye and contact lens drops from Bausch + Lomb’s consumer brand franchises and novel treatments within its pharmaceutical business such as MIEBO ™ (perfluorohexyloctane ophthalmic solution).

The assets acquired and liabilities assumed are included within Bausch + Lomb’s Pharmaceuticals business.

The XIIDRA Acquisition has been accounted for as a business combination under the acquisition method of accounting.

The estimated aggregate acquisition consideration of approximately $ 1,753 million is calculated as follows:

(in millions)

Cash consideration paid to Novartis at closing, per the Acquisition Agreement $ 1,750

Estimated fair value of contingent consideration 3

Aggregate purchase consideration $ 1,753

The upfront cash payment of $ 1,750 million was paid on September 29, 2023, using the proceeds received from the issuance of the B+L October 2028 Secured Notes and the establishment of the B+L September 2028 Term Facility, each as defined and further discussed in Note 10, “FINANCING ARRANGEMENTS”.

Contingent consideration included as part of the consideration relates to potential future milestone obligations of up to $ 750 million, including:

(i) up to $ 475 million in cash payable upon the achievement of specified commercialization and sales milestones for certain pipeline products and (ii) up to $ 275 million in cash payable upon the achievement of specified sales milestones for XIIDRA ® .

The fair value of the contingent consideration recognized on the acquisition date of $ 3 million was estimated by using the inputs disclosed in Note 5, “FAIR VALUE MEASUREMENTS”.

The Company reassesses its acquisition-related contingent consideration liabilities each quarter for changes in fair value.

Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed related to the XIIDRA Acquisition as of the acquisition date, inclusive of measurement period adjustments:

(in millions)

Intangible assets, net $ 1,600

Prepaid expenses and other current assets 162

Accrued and other current liabilities ( 1 )

Other non-current liabilities ( 31 )

Total identifiable net assets 1,730

Total fair value of consideration transferred $ 1,753

Since the date of acquisition, adjustments made during the measurement period have included an increase of $ 5 million to Intangible assets, net with an offset to Prepaid expenses and other current assets, which is reflected in the table above.

The fair value of the identifiable intangible assets is determined primarily using the “income approach,” which requires a forecast of the expected future cash flows (including revenue growth rates, cost of goods sold, operating expenses and discount rate).

The intangible assets acquired, as well as their fair values and estimated useful life consist of the following:

(in millions) Fair Value Estimated Useful

Life (In Years)

Product brand $ 1,595 8.75

Acquired in-process research and development intangible asset 5 N/A

Total Intangible assets, net $ 1,600

Prepaid expenses and other current assets associated with the XIIDRA Acquisition represent the terms of an interim contract to purchase inventory, as embedded within the agreements associated with the XIIDRA Acquisition.

The terms of the interim contract allowed Bausch + Lomb to acquire the remaining XIIDRA ® inventory from Novartis at the end of the contractual term.

The remaining inventory was acquired during December 2023 and the prepaid expenses and other current assets recognized were reclassified into Inventories, net, as of December 31, 2023.

The balance of this interim contract will be released to Cost of goods sold (excluding amortization and impairments of intangible assets) as Bausch + Lomb sells the acquired inventory over an assumed inventory turnover cycle of approximately two years .

Cost of goods sold for 2023 includes $ 20 million related to the release of this interim contract.

Other non-current liabilities associated with the XIIDRA Acquisition represent the fair value of the historical contingent consideration liability assumed from Novartis by Bausch + Lomb as a part of the acquisition.

The fair value of the assumed contingent consideration recognized on the acquisition date was $ 31 million and was estimated by using a discount rate of 11 %.

Goodwill associated with the XIIDRA Acquisition represents the workforce acquired as well as future operating efficiencies and cost savings.

Substantially all of the goodwill associated with the XIIDRA Acquisition is deductible for income tax purposes.

The valuation of the assets acquired and liabilities assumed as part of the XIIDRA Acquisition has not been finalized as of December 31, 2023.

The areas that could be subject to change primarily related to income tax matters.

Bausch + Lomb will finalize these amounts no later than one year from the acquisition date.

Revenue and Operating Results

Net revenues and earnings attributable to the XIIDRA Acquisition from the date of acquisition through December 31, 2023 were $ 106 million and $ 17 million, respectively.

Pro Forma Financial Information

The following table presents the unaudited pro forma combined results of the Company and the acquired assets for the years ended December 31, 2023 and 2022 as if the XIIDRA Acquisition, and the related financing, had occurred on January 1, 2022:

(in millions) 2023 2022

Revenues $ 9,006 $ 8,611

Net loss $ ( 822 ) $ ( 507 )

Net loss attributable to Bausch Health Companies Inc.

$ ( 762 ) $ ( 498 )

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and the acquired assets.

In order to reflect the occurrence of the acquisition on January 1, 2022 as required, the unaudited pro forma financial information includes adjustments to reflect incremental amortization expense incurred based on (i) the fair values of the identifiable intangible assets acquired, (ii) the incremental cost of products sold related to the release of an interim contract to purchase inventory, as embedded within the agreements associated with the XIIDRA Acquisition, (iii) the elimination of historical impairments and accretion expenses related to historical contingent considerations recorded by Novartis, (iv) the recording of new/assumed contingent consideration accretion expense, (v) the additional interest expense associated with the issuance of debt to finance the acquisition and (vi) the tax impact of each of the aforementioned adjustments.

Included in the Consolidated Statements of Operations for 2023 are:

(i) acquisition-related transaction costs, included within Other expense, net, of $ 20 million, which are directly related to the XIIDRA Acquisition, and include expenditures for representation and warranty insurance premiums, legal, valuation, accounting and other similar professional services and (ii) acquisition-related financing costs, included within Interest expense, of $ 16 million, which are directly related to the XIIDRA Acquisition, and include expenditures for certain upfront financing commitment costs related to debt financing commitments in place prior to the XIIDRA Acquisition, the issuance of the B+L October 2028 Secured Notes and the establishment of the B+L September 2028 Term Facility, each as defined and further discussed in Note 10, “FINANCING ARRANGEMENTS”.

These acquisition-related transaction and financing costs are reflected in pro forma Net (loss) income attributable to Bausch Health Companies Inc., in the table above, for 2022.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been, had the XIIDRA Acquisition been completed on January 1, 2022.

In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.

Acquisition of Blink ® Product Line

On July 6, 2023, Bausch + Lomb announced that it had consummated a transaction with Johnson & Johnson Vision, pursuant to which Bausch + Lomb, through an affiliate, acquired the Blink ® product line of eye and contact lens drops, which consists of Blink ® Tears Lubricating Eye Drops, Blink ® Tears Preservative Free Lubricating Eye Drops, Blink GelTears ® Lubricating Eye Drops, Blink ® Triple Care Lubricating Eye Drops, Blink Contacts ® Lubricating Eye Drops and Blink-N-Clean ® Lens Drops.

This acquisition was made by Bausch + Lomb to continue to grow its global over-the-counter business.

Under the terms of the purchase agreement, Bausch + Lomb, through an affiliate, acquired the Blink ® product line of eye and contact lens drops for an upfront cash payment of $ 107 million, which was paid on the closing of the transaction.

The acquired assets are included within Bausch + Lomb’s Vision Care business.

Bausch + Lomb accounted for the transaction as an asset acquisition.

The acquired assets consist of inventory and intangible assets.

The intangible assets acquired and estimated useful lives consist of the following:

(in millions) Estimated Useful

Life (In Years)

Corporate brands $ 73 12

Product brands 12 10

Technology and other 6 9

Total Intangible assets, net $ 91

Acquisition of AcuFocus

On January 17, 2023, Bausch + Lomb acquired AcuFocus, Inc., an ophthalmic medical device company, for an upfront payment of $ 35 million, $ 31 million of which was paid in January 2023, with the remaining purchase price to be paid within 18 months following the date of the transaction, less any amounts that are the subject of any indemnification claims .

The acquisition was made to acquire certain small aperture intraocular technology for the treatment of certain cataract conditions.

Additional contingent payments may be payable upon achievement of future sales milestones.

Bausch + Lomb recorded an initial acquisition-related contingent consideration liability of approximately $ 5 million.

As a result of this transaction, recorded within the Consolidated Balance Sheets are Intangibles, net of $ 28 million, Goodwill of $ 8 million, other assets of $ 9 million and liabilities of $ 6 million.

Acquisition of Total Titanium

On December 12, 2022, Bausch + Lomb acquired Total Titanium, Inc., a privately held ophthalmic microsurgical instrument and machined parts manufacturing company.

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Refer to Note 21, “COMMITMENTS AND CONTINGENCIES” for further detail regarding potential future milestone payments related to previously entered transactions and agreements.

Acquisition of Paragon BioTeck, Inc.

On November 21, 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.

The acquisition of Paragon Bioteck has been accounted for as an asset acquisition.

The primary assets in the transaction, the trademarks, represented substantially all of the fair value of the gross assets acquired.

There are no future sales milestones associated with this transaction.

On March 31, 2021, the Company announced that it and certain of its affiliates had entered into a definitive agreement to sell all of its equity interests in Amoun Pharmaceutical Company S.A.E.

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

The Amoun business was part of the International Rx segment (previously included within the former Bausch + Lomb/International segment) and was reclassified as held for sale as of December 31, 2020.

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

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(i) reducing headcount, (ii) eliminating real estate costs associated with unused or under-utilized facilities and (iii) implementing contribution margin improvement and other cost reduction initiatives.

The liability associated with restructuring and integration costs as of December 31, 2022 was $ 12 million.

The Company incurred $ 30 million, $ 18 million and $ 11 million of restructuring and integration-related costs and made payments of $ 41 million, $ 19 million and $ 18 million during 2022, 2021 and 2020, respectively.

The Company incurred $ 58 million, $ 30 million and $ 18 million of restructuring and integration-related costs during 2023, 2022 and 2021, respectively.

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

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(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.

Included in Restructuring, integration, separation and IPO costs for the years ended December 31, 2022 and 2021 are Separation and IPO costs of $ 33 million and $ 32 million, respectively.

Included in Restructuring, integration, separation and IPO costs for 2023, 2022 and 2021 are Separation and IPO costs of $ 4 million, $ 33 million and $ 32 million, respectively.

The Company has also incurred, and expects to continue to incur with respect to the B+L Separation, separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation and the suspended Solta IPO including, but are not limited to:

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

Included in Selling, general and administrative for years ended December 31, 2022 and 2021 are Separation-related and IPO-related costs of $ 94 million and $ 132 million, respectively.

Included in Selling, general and administrative for 2023, 2022 and 2021 are Separation-related and IPO-related costs of $ 22 million, $ 94 million and $ 132 million, respectively.

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

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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.

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

securities litigation, which was subject to one objector’s appeal of the final court approval and the Glumetza Antitrust Litigation.

With respect to the U.S.

Securities Litigation, 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 litigation settlement and judgment have become “final”, as no more appeals can be filed.

As a result, the Company’s rights to the funds in escrow were extinguished and the Company reduced Restricted cash and other settlement deposits with a corresponding reduction to liabilities for legal settlements, included in Accrued and other current liabilities on the Company’s Consolidated Balance Sheets, by $ 1,210 million during the third quarter of 2022.

Securities Litigation - Opt -Out Litigation” of Note 20, “LEGAL PROCEEDINGS” for additional details.

There were no transfers into or out of Level 3 during 2023 and 2022.

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

As of December 31, 2021, there were no cross-currency swaps.

During the third quarter of 2022, Bausch + Lomb entered into cross-currency swaps (the “2022 Cross-Currency Swaps”), with aggregate notional amounts of $ 1,000 million, to mitigate fluctuation in the value of a portion of its euro-denominated net investment in its consolidated financial statements from fluctuation in exchange rates.

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(in millions) 2023 2022

Gain (loss) recognized in Other comprehensive loss $ ( 45 ) $ 77

Loss recognized in Other comprehensive loss $ 45 $ 45

Gain excluded from assessment of hedge effectiveness $ 13 $ 6

Location of gain of excluded component Interest Expense

Interest settlement of the 2022 Cross-Currency Swaps occurs in January and July each year, with the first settlement in January 2023.

Future settlements of the 2022 Cross-Currency Swaps will be reported as investing activities in the Consolidated Statements of Cash Flows.

For the years ended December 31, 2022 and 2021, the Company received $ 0 and $ 27 million, respectively, in settlements of its cross-currency swaps which are reported as Investing activities in the Consolidated Statements of Cash Flows.

No portion of the 2022 Cross-Currency Swaps were ineffective for 2023 and 2022.

For 2023 and 2022, the Company received $ 13 million and $ 0 , respectively, in settlements of its 2022 Cross-Currency Swaps which are reported as Investing activities in the Consolidated Statements of Cash Flows.

Foreign Currency Exchange Contracts

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(in millions) 2023 2022

Gain related to changes in fair value $ 2 $ 9

Loss related to settlements $ ( 20 ) $ ( 17 )

(Loss) Gain related to changes in fair value $ ( 5 ) $ 2

Gain (loss) related to settlements $ 6 $ ( 20 )

Acquisition-related Contingent Consideration Obligations

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Significant increases or decreases in any of those inputs in isolation could result in a significantly higher or lower fair value measurement.

At December 31, 2022, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 6 % to 18 %, and a weighted average risk-adjusted discount rate

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 %, and a weighted average risk-adjusted discount rate of 7 %.

The weighted average risk-adjusted discount rate was calculated by weighting each contract’s relative fair value at December 31, 2023.

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Accretion for the time value of money $ 19 $ 16

Fair value adjustments 12 ( 6 )

Acquisition-related contingent consideration adjustments 28 11

Fair value adjustments due to changes in estimates of other future payments 40 12

Acquisition-related contingent consideration 59 28

Additions (Note 3) 38 —

Payments / Settlements ( 46 ) ( 28 )

Foreign currency translation adjustment included in other comprehensive loss — 1

Ending balance, December 31, 292 241

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Total finite-lived intangible assets 27,262 ( 22,509 ) 4,753 25,436 ( 21,334 ) 4,102

Acquired IPR&D NA 5 — 5 — — —

B&L Trademark NA 1,698 — 1,698 1,698 — 1,698

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

Impairment charges associated with these assets are included in Asset impairments in the Consolidated Statements of Operations.

The Company continues to monitor the recoverability of its finite-lived intangible assets and tests the intangible assets for impairment if indicators of impairment are present.

The Company estimates the fair values of long-lived assets with finite lives using an undiscounted cash flow model which utilizes Level 3 unobservable inputs.

The undiscounted cash flow model relies on assumptions regarding revenue growth rates, gross profit, selling, general and administrative expenses, research and development expenses.

Impairment charges associated with these assets are included in Asset impairments, including loss on assets held for sale in the Consolidated Statement of Operations.

Asset impairments, including loss on assets held for sale in 2022 were $ 15 million and included:

The undiscounted cash flow model relies on assumptions regarding revenue growth rates, gross profit, selling, general and administrative expenses, and research and development expenses.

Asset impairments in 2023 were $ 54 million, and primarily related to:

(i) $ 37 million related to the Company’s Uceris ® Foam product, as discussed below, (ii) $ 8 million, in aggregate, attributable to certain trade names no longer in use and (iii) $ 9 million related to the discontinuance of certain product lines.

In the second quarter of 2023, the U.S.

Food and Drug Administration (“FDA”) approved an Abbreviated New Drug Application (“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, which began to be sold by the competitor in the three months ended June 30, 2023, is a generic version of the Company’s Uceris ® Foam product.

During the second quarter of 2023, the Company revised its long-term outlook for the Uceris ® Foam product to reflect the entrant of this, and potentially other, generic competitors.

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.

The remaining carrying value of the Uceris ® Foam product related intangible assets is not material.

Asset impairments in 2022 were $ 15 million and included:

(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.

On August 10, 2022, a court held, that among other findings, that certain U.S.

Xifaxan ® intangible assets had a carrying value of $ 2,155 million and an estimated remaining useful life of 48 months as of December 31, 2023.

On August 10, 2022, a court held, among other matters, that certain U.S.

patents protecting the composition and use of Xifaxan ® for treating inflammatory bowel syndrome with diarrhea (“IBS-D”) were invalid (the “Norwich Legal Decision”).

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See “ Xifaxan ® Paragraph IV Proceedings ” of Note 20, “LEGAL PROCEEDINGS” for details of this litigation matter and the Company’s response.

Xifaxan ® revenues were $ 1,216 million and $ 1,194 million for the nine months ended September 30, 2022 and 2021, respectively.

The Company performed this assessment using a probability-weighted undiscounted cash flow analysis, with a base case representing the Company’s 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 timing of when a competitor or competitors will be able to successfully launch a generic version to Xifaxan ® , if they are able to launch one at all.

As 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 ® , the Company determined, in the third quarter of 2022, that the ruling in the Norwich Legal Decision constituted an event requiring assessment of the Xifaxan ® intangible assets for potential impairment using different scenarios representing a range of different outcomes which address, among other things, the timing of when a competitor or competitors will be able to successfully launch a generic version to Xifaxan ® , if they are able to launch one at all.

This assessment resulted in no impairment of the carrying value of the Xifaxan ® finite-lived intangible assets as of September 30, 2022.

During the fourth quarter of 2022 there were no material changes to the facts and circumstances of the Norwich Legal Decision or to actual or expected business performance for Xifaxan ® .

From September 30, 2022 through the end of 2023 there were no material changes to the facts and circumstances of the Norwich Legal Decision or to actual or expected business performance for Xifaxan ® .

Based on these factors, no impairment to the carrying value of the Xifaxan ® finite-lived intangible assets was identified as of December 31, 2023.

The Company also determined that no change to the remaining useful lives of its Xifaxan ® finite-lived intangible assets was required.

Xifaxan ® finite-lived intangible assets included in the audited Consolidated Balance Sheets had a carrying value of $ 2,693 million and an estimated remaining useful life of 60 months as of December 31, 2022.

It is possible that the Norwich Legal Decision and other potential future developments:

(i) may adversely impact the estimated future cash flows associated with these products, which could result in an impairment of the value of these intangible assets in one or more future periods and (ii) may result in shortened useful lives of the Xifaxan ® finite-lived intangible assets, which would increase amortization expense in future periods.

(i) may adversely impact the estimated future cash flows associated with these products, which could result in an impairment of the value of these intangible assets in one or more future periods and (ii) may result in shortened useful lives of the Xifaxan ® intangible assets, which would increase amortization expense in future periods.

Any such impairment or shortening of the useful lives of Xifaxan ® could be material to the results of operations of the Company in the period or periods in which they were to occur.

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

Asset impairments, including loss on assets held for sale in 2021 were $ 234 million and included:

(i) impairments of $ 105 million, in aggregate, due to decreases in forecasted sales of certain product lines, (ii) an $ 88 million loss on assets held for sale in connection with the Amoun Sale as discussed in Note 3, “ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE”, (iii) impairments of $ 23 million, in aggregate, related to the discontinuance of certain product lines and (iv) $ 18 million related to a portion of an IT infrastructure improvement project no longer being utilized.

Asset impairments, including loss on assets held for sale in 2020 included impairments of:

(i) $ 96 million to reduce the carrying value of the Amoun business to its estimated fair value less costs to sell due to classifying the business as held for sale, (ii) $ 16 million in aggregate, due to decreases in forecasted sales of certain product lines, (iii) $ 1 million in aggregate, related to the discontinuance of certain product lines not aligned with the focus of the Company’s core businesses and (iv) $ 1 million related to Acquired IPR&D not in service.

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

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(in millions) Bausch +

International Bausch +

Lomb Salix International Ortho Dermatologics Solta Medical Diversified Products Total

Lomb Salix International Dermatology Solta Medical Diversified Total

Balance, January 1, 2022 5,318 3,159 825 798 — 2,357 12,457

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

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

Foreign exchange and other 117 — — — — — — 117

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

Realignment of segment goodwill — — — ( 798 ) 115 683 —

Additions 5 — — — — — 5

Impairment — — — — — ( 824 ) ( 824 )

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Balance, December 31, 2022 5,246 3,159 789 — 115 2,238 11,547

Realignment of segment goodwill — — — — ( 798 ) 115 683 —

Additions 31 — — — — — 31

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Revenue growth rates inherent in these forecasts are based on input from internal and external market research that compare factors such as growth in global economies, recent industry trends and product life-cycles.

Macroeconomic factors such as changes in economies, changes in the competitive landscape including the unexpected LOE to the Company’s product portfolio, changes in government legislation, product life-cycles, industry consolidations and other changes beyond the Company’s control could have a positive or negative impact on achieving its targets.

Accordingly, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future.

2020 Interim Impairment Assessment

The negative impacts of the COVID-19 pandemic on the global economy led to significant volatility in the global equity markets and the Company was able to continue its operations with limited disruptions.

In performing its assessment during 2020, the Company considered the possible effects and outcomes of the COVID-19 pandemic on, among other things, its supply chain, customers and distributors, employee base, product sustainability, research and development activities, product pipeline and consumer demand and related rebates and discounts and made adjustments to the long-term forecasts used in previous goodwill impairment assessments, for these and other matters.

After completing this assessment, the Company believed that, with the exception of the Ortho Dermatologics reporting unit, its long-term forecasted cash flows, as adjusted for the possible outcome of the COVID-19 pandemic and other matters, did not indicate that the fair value of any reporting unit may be below its carrying value.

During the interim periods of 2020, after giving consideration to the nature and timing of the negative impacts of the COVID-19 pandemic on the Company’s forecasted cash flows, with the exception of the Ortho Dermatologics reporting unit, no events occurred, or circumstances changed that would indicate that the fair value of any other reporting unit might be below its carrying value and therefore, no impairments were recorded.

During the three months ended March 31, 2020 and June 30, 2020, the operating results for the Ortho Dermatologics reporting unit were less than forecasted primarily due to certain products experiencing longer launch cycles than originally anticipated as a result of the COVID-19 pandemic.

The Company revised its long-term forecasts as of March 31, 2020 and as of June 30, 2020 for these matters.

Management believed that these events were indicators that there was less headroom as of March 31, 2020 and June 30, 2020 as compared to the headroom calculated on the date Ortho Dermatologics goodwill was previously tested for impairment.

Therefore, a quantitative fair value test for impairment to the goodwill of the Ortho Dermatologics reporting unit was performed at March 31, 2020 and at June 30, 2020.

The quantitative fair value tests utilized the Company’s most recent cash flow projections for the Ortho Dermatologics reporting unit as revised in the then respective quarter of 2020 which reflected current market conditions and current trends in business performance.

Based on the quantitative fair value tests, the fair value of the Ortho Dermatologics reporting unit continued to be greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit at March 31, 2020 and at June 30, 2020.

2020 Annual Impairment Test

The Company conducted its annual goodwill impairment test as of October 1, 2020 by first assessing qualitative factors.

Based on its qualitative assessment as of October 1, 2020, management believed that, with the exception of the Ortho Dermatologics reporting unit, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded that a quantitative fair value test for those reporting units was not required.

As part of its qualitative assessment of the Ortho Dermatologics reporting unit as of October 1, 2020, the Company considered, among other matters, a range of potential impacts of COVID-19 pandemic related matters and the limited headroom calculated on the date Ortho Dermatologics goodwill was last tested for impairment (June 30, 2020).

The Company believed that these factors may suggest that it was more likely than not that the fair value of the Ortho Dermatologics reporting unit was less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The Company performed a quantitative fair value test for the Ortho Dermatologics reporting unit as of October 1, 2020.

The quantitative fair value test utilized the Company’s most recent cash flow projections as revised in the fourth quarter of 2020 which reflected current market conditions and current trends in business performance.

The quantitative fair value test utilized a long-term growth rate of 2.0 % and a range of discount rates between 9.50 % and 9.75 %, in estimation of the fair value of this reporting unit.

Based on the quantitative fair value test, the fair value of the Ortho Dermatologics reporting unit was approximately 10 % greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit.

Macroeconomic factors such as changes in economies, changes in the competitive landscape including the unexpected loss of exclusivity to the Company’s product portfolio, changes in government legislation, product life-cycles, industry consolidations and other changes beyond the Company’s control could have a positive or negative impact on achieving its targets.

Accordingly, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future and such charges could be material.

First Quarter 2021 - Realignment of Segments

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

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

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

The Bausch + Lomb segment consisted of the:

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

The Ortho Dermatologics segment consisted of the:

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

The Diversified Products segment consisted of the:

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

The Dermatology segment consisted of the:

(i) Dermatology and (ii) Global Solta reporting units.

The Diversified segment consisted of the:

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

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

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March 31, 2021 Impairment

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.

During the three months ended March 31, 2021, management identified launches of certain Dermatology 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.

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

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

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

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

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

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

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

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

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

Second Quarter 2021 - Realignment of Bausch + Lomb Reporting Units

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

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

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

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

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

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

Bausch + Lomb and (ii) International Bausch + Lomb

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

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

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

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

The quantitative fair value test utilized the Company’s most recent cash flow projections as revised in the second quarter of 2021 which reflected current market conditions and current trends in business performance.

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June 30, 2021 and September 30, 2021 Interim Assessment

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

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

The Company continued to monitor the market conditions impacting the Dermatology reporting unit.

The Company’s latest forecasts for the Dermatology reporting unit included a range of potential outcomes for, among other matters:

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

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

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

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

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

2021 Annual Impairment Test

The Company conducted its annual goodwill impairment test as of October 1, 2021 by first assessing qualitative factors.

Based on its qualitative assessment as of October 1, 2021, management believed that, with the exception of the Ortho Dermatologics reporting unit, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded that a quantitative fair value test for those reporting units was not required.

As part of its qualitative assessment of the Ortho Dermatologics reporting unit as of October 1, 2021, the Company considered, among other matters, the limited headroom as a result of the impairment to the goodwill of the Ortho Dermatologics reporting unit when last tested (March 31, 2021) and macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates.

The Company believed that these facts and circumstances may suggest that it was more likely than not that the fair value of the Ortho Dermatologics reporting unit was less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

Based on its qualitative assessment as of October 1, 2021, management believed that, with the exception of the Dermatology reporting unit, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded that a quantitative fair value test for those reporting units was not required.

As part of its qualitative assessment of the Dermatology reporting unit as of October 1, 2021, the Company considered, among other matters, the limited headroom as a result of the impairment to the goodwill of the Dermatology reporting unit when last tested (March 31, 2021) and macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates.

The Company believed that these facts and circumstances may suggest that it was more likely than not that the fair value of the Dermatology reporting unit was less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections as revised in the fourth quarter of 2021 which reflected current market conditions and current trends in business performance.

The quantitative fair value test utilized a long-term growth rate of 1.0 % and a discount rate of 9.0 %, in estimation of the fair value of this reporting unit.

Based on the quantitative fair value test, the fair value of the Dermatology reporting unit was approximately 10.0 % greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit.

First Quarter 2022 - Realignment of Segments

Commencing in the first quarter of 2022, the Company began operating in the following reportable segments:

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

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

The Salix segment consists of the Salix reporting unit.

The International segment consists of the International reporting unit.

The Diversified Products segment consists of the:

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

The Diversified segment consists of the:

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

The Solta Medical segment consists of the Solta reporting unit.

The Bausch + Lomb segment consists of the:

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

As such, the new segment structure does not impact the Company’s reporting units but realigns the two reporting units of the former Ortho Dermatologics segment whereby the Ortho Dermatologics reporting unit is now part of the current Diversified Products segment and the Solta reporting unit is now its own operating and reportable segment, and therefore management concluded that a quantitative fair value test was not required.

(i) Vision Care, (ii) Pharmaceuticals and (iii) Surgical reporting units.

As such, the new segment structure does not impact the Company’s reporting units but realigns the two reporting units of the former Dermatology segment whereby the Dermatology reporting unit is now part of the current Diversified segment and the Solta Medical reporting unit is now its own operating and reportable segment, and therefore management concluded that a quantitative fair value test was not required.

March 31, 2022 Interim Assessment

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inflation rate was higher than previously expected.

Given the limited headroom of the Ortho Dermatologics reporting unit as calculated on October 1, 2021, the Company believed that these facts and circumstances suggested the fair value of the Ortho Dermatologics reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

Given the limited headroom of the Dermatology reporting unit as calculated on October 1, 2021, the Company believed that these facts and circumstances suggested the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections as revised in the fourth quarter of 2022 which reflected current market conditions and current trends in business performance.

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The discount rate contemplated changes in the current macroeconomic conditions noting certain inputs such as the risk-free rate increased over the three months ended March 31, 2022, and was offset by decreases in other reporting unit specific risks during the same period.

Based on the quantitative fair value test, the fair value of the Ortho Dermatologics reporting unit was less than 2 % greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit.

Based on the quantitative fair value test, the fair value of the Dermatology reporting unit was less than 2 % greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit.

June 30, 2022 Interim Assessment

Ortho Dermatologics

During the three months ended June 30, 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 as of March 31, 2022.

Given the limited headroom of the Ortho Dermatologics reporting unit as calculated on March 31, 2022, the Company believed that these facts and circumstances suggested the fair value of the Ortho Dermatologics reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Ortho Dermatologics reporting unit as revised in the second quarter of 2022 which reflected current market conditions and current trends in business performance.

The Company’s discounted cash flow model for the Ortho Dermatologics reporting unit included a range of potential outcomes for, among other matters, macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates.

and other macroeconomic factors impacted key assumptions used to value the Dermatology reporting unit as of March 31, 2022.

Given the limited headroom of the Dermatology reporting unit as calculated on March 31, 2022, the Company believed that these facts and circumstances suggested the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Dermatology reporting unit as revised in the second quarter of 2022 which reflected current market conditions and current trends in business performance.

The Company’s discounted cash flow model for the Dermatology reporting unit included a range of potential outcomes for, among other matters, macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates.

The quantitative fair value test utilized a long-term growth rate of 1.0 % and a discount rate of 10.0 %.

The discount rate had increased 1.0 % since the assessment performed as of March 31, 2022, as a result of changes in macroeconomic conditions, including an increase in the risk-free rate during the three months ended June 30, 2022.

Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value as of June 30, 2022, and the Company recognized a goodwill impairment of $ 83 million.

Based on the quantitative fair value test, the carrying value of the Dermatology reporting unit exceeded its fair value as of June 30, 2022, and the Company recognized a goodwill impairment of $ 83 million.

Bausch + Lomb Reporting Units

During the period May 6, 2022 (the time Bausch + Lomb’s stock began trading publicly) through June 30, 2022, equity and bond markets were negatively impacted by various macroeconomic and geopolitical factors including, but not limited to:

During the period May 6, 2022 (the date Bausch + Lomb’s stock began trading publicly) through June 30, 2022, equity and bond markets were negatively impacted by various macroeconomic and geopolitical factors including, but not limited to:

rising inflation rates in the U.S.

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The Company believed that these facts and circumstances suggest the fair value of the three reporting units of the Bausch + Lomb segment could be less than their respective carrying amounts.

Therefore, separate quantitative fair value tests were performed for the Vision Care, Surgical and Ophthalmic reporting units of the Bausch + Lomb segment.

Therefore, separate quantitative fair value tests were performed for the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment.

The quantitative fair value tests utilized the Company’s most recent cash flow projections for each of its reporting units as revised in the second quarter of 2022 which reflected current market conditions and current trends in business performance.

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September 30, 2022 Interim Assessment

Ortho Dermatologics

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

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.

Based on the impairment of goodwill recognized in the second quarter of 2022 for the Ortho Dermatologics reporting unit, the reporting unit had no headroom as calculated on June 30, 2022, and as such, the Company believed that these facts and circumstances suggested the fair value of the Ortho Dermatologics reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Ortho Dermatologics reporting unit as revised in the third quarter of 2022 which reflected current market conditions and current trends in business performance.

The Company’s discounted cash flow model for the Ortho Dermatologics reporting unit includes, 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.

The quantitative fair value test utilized a long-term growth rate of 1 % and the discount rate increased from 10.0 % at June 30, 2022 to 10.5 % at September 30, 2022, which reflects the increases in market interest rates.

Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at September 30, 2022, and the Company recognized a goodwill impairment of $ 119 million for the three months ended September 30, 2022.

As of September 30, 2022, the Ortho Dermatologics reporting unit had remaining goodwill of $ 480 million.

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

Based on the impairment of goodwill recognized in the second quarter of 2022 for the Dermatology reporting unit, the reporting unit had no headroom as calculated on June 30, 2022, and as such, the Company believed that these facts and circumstances suggested the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Dermatology reporting unit as revised in the third quarter of 2022 which reflected current market conditions and current trends in business performance.

The Company’s discounted cash flow model for the Dermatology reporting unit included, 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.

The quantitative fair value test utilized a long-term growth rate of 1.0 % and the discount rate increased from 10.0 % at June 30, 2022 to 10.5 % at September 30, 2022, which reflected the increases in market interest rates.

Based on the quantitative fair value test, the carrying value of the Dermatology reporting unit exceeded its fair value at September 30, 2022, and the Company recognized a goodwill impairment of $ 119 million for the three months ended September 30, 2022.

As of September 30, 2022, the Dermatology reporting unit had remaining goodwill of $ 480 million.

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 such, the Company believes that the uncertainty of the possible outcomes of the Norwich Legal Decision and the potential impact on Xifaxan ® revenues are indicators that the Salix reporting unit’s fair value could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

As such, the Company believed that this uncertainty of the possible outcomes of the Norwich Legal Decision and the potential impact on Xifaxan ® revenues were indicators that the Salix reporting unit’s fair value could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The Company performed its quantitative fair value test using a probability-weighted discounted cash flow analysis, with a base case representing the Company’s 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.

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However, as the Company’s probability-weighted discount valuation includes certain scenarios under which the Company does not retain market exclusivity for Xifaxan ® through January 2028, these probability-weighted fair values of the Salix reporting unit exceeded its carrying value by less than 5.0 %.

During the interim periods of 2022, no events occurred, or circumstances changed during the period October 1, 2021 (the date of the last annual impairment test) through September 30, 2022, that indicated that the fair value of any reporting unit, other than the Ortho Dermatologics reporting unit, the Salix reporting unit and the reporting units of the Bausch + Lomb segment, might be below their respective carrying values.

During the interim periods of 2022, no events occurred, or circumstances changed during the period October 1, 2021 (the date of the last annual impairment test) through September 30, 2022, that indicated that the fair value of any reporting unit, other than the Dermatology reporting unit, the Salix reporting unit and the reporting units of the Bausch + Lomb segment, might be below their respective carrying values.

2022 Annual Impairment Test

The Company’s annual goodwill impairment test as of October 1, 2022, included performing separate quantitative fair value tests for the Neurology and Other reporting unit and the Vision Care, Surgical and Ophthalmic reporting units of the Bausch + Lomb segment.

The Company’s annual goodwill impairment test as of October 1, 2022, included performing separate quantitative fair value tests for the Neurology reporting unit and the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment.

For its remaining reporting units, the Company conducted its annual goodwill impairment test as of October 1, 2022, by first assessing qualitative factors.

Based on its 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.

Neurology and Other

The Neurology and Other 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 both pricing of pharmaceutical products and/or directing patients to lower cost unbranded generic products.

The nature of the Neurology and Other reporting unit’s product portfolio, which includes branded generic pharmaceuticals, is by its nature impacted by these changing market dynamics.

The Neurology 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 both pricing of pharmaceutical products and/or directing patients to lower cost unbranded generic products.

The nature of the Neurology reporting unit’s product portfolio, which includes branded generic pharmaceuticals, is by its nature impacted by these changing market dynamics.

As a result, the Company has begun taking steps to:

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

The quantitative fair value test for the Neurology and Other reporting unit utilized the most recent cash flow projections for the reporting unit as revised in the fourth quarter of 2022 to reflect current market conditions and current trends in business performance.

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

The quantitative fair value test for the Neurology reporting unit utilized the most recent cash flow projections for the reporting unit as revised in the fourth quarter of 2022 to reflect current market conditions and current trends in business performance.

The quantitative assessment utilized a long-term growth rate of - 2.5 % 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, goodwill for the Neurology and Other reporting unit was impaired during the Company’s most recent annual impairment test reflecting its best estimate at that time of the outlook and risks of this business.

Based on the quantitative fair value test, the carrying value of the Neurology and Other reporting unit exceeded its fair value as of October 1, 2022, and the Company recognized a goodwill impairment of $ 622 million.

As of December 31, 2022, the Neurology and Other reporting unit had remaining goodwill of $ 1,439 million.

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

Based on the quantitative fair value test, the carrying value of the Neurology reporting unit exceeded its fair value as of October 1, 2022, and the Company recognized a goodwill impairment of $ 622 million.

As of December 31, 2022, the Neurology reporting unit had remaining goodwill of $ 1,439 million.

Bausch + Lomb Reporting Units

The quantitative fair value test for the Vision Care, Surgical and Ophthalmic reporting units of the Bausch + Lomb segment 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.

The quantitative fair value test for the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment 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.

The quantitative assessment utilized long-term growth rates of 2.0 % and 3.0 % and discount rates of 9.50 % and 12.25 %, in estimation of the fair value of the reporting units.

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December 31, 2022

During the period October 1, 2022 through December 31, 2022, the Company continued to monitor the market conditions and trends in business performance for all its reporting units, particularly as they pertain to the Ortho Dermatologics and Salix reporting units, and 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.

However, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future and those charges could be material.

Ortho Dermatologics

As a result of the impairment of goodwill in the third quarter of 2022, the Ortho Dermatologics reporting unit had no headroom on September 30, 2022, and as such, the Company continued to monitor the market conditions impacting the Ortho Dermatologics reporting unit during the period October 1, 2022 through December 31, 2022.

During the period October 1, 2022 through December 31, 2022, the Company continued to monitor the market conditions and trends in business performance for all its reporting units, particularly as they pertain to the Dermatology and Salix reporting units, and 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 a result of the impairment of goodwill in the third quarter of 2022, the Dermatology reporting unit had no headroom on September 30, 2022, and as such, the Company continued to monitor the market conditions impacting the Dermatology reporting unit during the period October 1, 2022 through December 31, 2022.

During the fourth quarter of 2022, the Company evaluated the reporting unit’s performance as well as its 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.

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Additionally, based on corporate bond rates as of December 31, 2022, the Company 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.

Based on these factors, management concluded that it was more likely than not that the carrying value of its Ortho Dermatologics reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required during the quarter ended December 31, 2022.

However, given the reporting unit’s limited headroom, any changes or other potential future developments may adversely impact the estimated fair value of the Ortho Dermatologics reporting unit in one or more future periods requiring an impairment to goodwill to be recognized.

Any such impairment could be material to the Company’s results of operations in the period in which it was to occur.

Based on these factors, management concluded that it was more likely than not that the carrying value of its Dermatology reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required during the quarter ended December 31, 2022.

Based on the quantitative fair value testing performed in the third quarter of 2022, the Salix reporting unit had limited headroom as of September 30, 2022, and as such, the Company continued to monitor the potential impacts of changes in the Norwich Legal Decision and market conditions on the valuation of the Salix reporting unit during the period October 1, 2022 through December 31, 2022.

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Based on these factors, management concluded that it was more likely than not that the carrying value of its Salix reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required during the quarter ended December 31, 2022.

However, it is possible that the Norwich Legal Decision and other potential future developments may adversely impact the estimated fair value of the Salix reporting unit in one or more future periods.

Any such impairment could be material to the Company’s results of operations in the period in which it were to occur.

2023 Interim Assessment

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 preliminary assessment of future business performance indicated that the reporting unit’s future financial results were expected to be 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, suggested that the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Dermatology reporting unit as revised in the third quarter of 2023 which reflected current market conditions and current trends in business performance.

The quantitative fair value test utilized a long-term growth rate of 0.0 % and a discount rate of 10.75 %.

Based on the quantitative fair value test, the carrying value of the Dermatology reporting unit exceeded its fair value at September 30, 2023, and the Company recognized a goodwill impairment of $ 151 million for the three months ended September 30, 2023.

As of September 30, 2023 and December 31, 2023, the Dermatology reporting unit had remaining goodwill of $ 329 million.

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 preliminary assessment of future business performance indicated that the reporting unit’s future financial results were expected to be 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, suggested that the fair value of the Neurology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test for the Neurology reporting unit utilized the most recent cash flow projections for the Neurology reporting unit as revised in the third quarter of 2023 to reflect current market conditions and current trends in business performance.

The quantitative assessment utilized a long-term growth rate of - 2.5 % and a discount rate of 10.50 %.

Based on the quantitative fair value test, the carrying value of the Neurology reporting unit exceeded its fair value at September 30, 2023, and the Company recognized a goodwill impairment of $ 251 million for the three months ended

September 30, 2023.

As of September 30, 2023 and December 31, 2023, the Neurology reporting unit had remaining goodwill of $ 1,192 million and $ 1,177 million, respectively.

2023 Annual Impairment Test

The Company’s 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 of the Diversified segment and the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment.

For its remaining reporting units, the Company conducted its annual goodwill impairment test as of October 1, 2023, by first assessing qualitative factors.

Based on its qualitative assessment as of October 1, 2023, 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.

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.

The Company expects these dynamics to intensify in the future, and as such has revised its 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.

Based on the quantitative fair value test, 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 12.75 %, 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 75 %, and, therefore, there was no impairment to goodwill.

Bausch + Lomb Reporting Units

The annual goodwill impairment test for the Vision Care, Surgical and Pharmaceuticals reporting units of Bausch + Lomb was conducted as of October 1, 2023 by performing a quantitative assessment for each of the reporting units.

The quantitative assessment utilized long-term growth rates of 2.0 % and 3.0 % and discount rates ranging from 10.25 % and 11.50 %, in estimation of the fair value of the reporting units.

After completing the testing, the fair value of each of these reporting units exceeded its respective carrying value by more than 25 %, and, therefore, there was no impairment to goodwill.

December 31, 2023

During the period October 1, 2023 through December 31, 2023, the Company continued to monitor the market conditions and trends in business performance for all its reporting units, particularly as they pertain to the Dermatology, Neurology and Generics reporting units, and 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.

However, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future and those charges could be material.

Accumulated goodwill impairment charges through December 31, 2023 were $ 5,497 million.

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(in millions) 2023 2022

Legal matters and related fees $ 326 $ 1,890

Product rebates $ 1,069 $ 983

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Employee compensation and benefit costs 360 300

Legal matters and related fees 344 326

Interest 236 208

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Senior Secured Credit Facilities:

2018 Restated Credit Agreement

2023 Revolving Credit Facility June 2023 $ — $ — $ 285 $ 285

June 2025 Term Loan B Facility June 2025 — — 2,829 2,772

November 2025 Term Loan B Facility November 2025 — — 994 984

2022 Amended Credit Agreement

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February 2027 Term Loan B Facility February 2027 2,312 2,279 2,437 2,392

AR Credit Facility January 2028 350 350 — —

B+L Credit Facilities

B+L Revolving Credit Facility May 2027 275 275 — —

B+L Term Facility May 2027 2,488 2,439 — —

B+L May 2027 Term Loan B Facility May 2027 2,462 2,426 2,488 2,439

B+L September 2028 Term Loan B Facility September 2028 499 487 — —

Senior Secured Notes:

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October 2030 352 666 352 711

B+L Senior Secured Notes:

B+L 8.375 % Secured Notes

October 2028 1,400 1,377 — —

9.00 % Intermediate Holdco Secured Notes

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Senior Unsecured Notes:

April 2025 — — 2,650 2,640

December 2025 955 950 959 951

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Covenant Compliance

The Senior Secured Credit Facilities (as defined below), the B+L Credit Facilities (as defined below) and the indentures governing the Senior Secured Notes (as defined and described in the table above), the 9.00 % Intermediate Holdco Secured Notes (as defined below) and Senior Unsecured Notes (as defined and described in the table above) contain customary affirmative and negative covenants and specified events of default.

The Senior Secured Credit Facilities (as defined below), the B+L Credit Facilities (as defined below), the AR Credit Facility (as defined below) and the indentures governing the Senior Secured Notes (as defined and described in the table above), the 9.00 % Intermediate Holdco Secured Notes (as defined below) and Senior Unsecured Notes (as defined and described in the table above) contain customary affirmative and negative covenants and specified events of default.

These affirmative and negative covenants include, among other things, and subject to certain qualifications and exceptions, covenants that restrict the Company’s ability and the ability of its subsidiaries to:

incur or guarantee additional indebtedness;

create or permit liens on assets;

pay dividends

on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness;

create or permit liens

pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness;

make certain investments and other restricted payments;

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The Company, based on its current forecast for the next twelve months from the date of issuance of these financial statements, expects to remain in compliance with its financial maintenance covenant and meet its debt service obligations over that same period.

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.

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.

The Company continues to take steps to ensure compliance with its financial maintenance covenant and may take other actions to reduce its debt levels to align with the Company’s long-term strategy, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities as deemed appropriate.

The Company continues to take steps to ensure compliance with its financial maintenance covenant and may take other actions to reduce its debt levels and improve its capital structure to align with the Company’s long-term strategy, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities as deemed appropriate.

Exchange Offer

On September 30, 2022, the Company closed a series of transactions whereby it exchanged (the “Exchange Offer”) validly tendered senior unsecured notes with an aggregate outstanding principal balance of $ 5,594 million as set forth in the table below (collectively, the “Existing Unsecured Senior Notes”) for $ 3,125 million in aggregate principal balance of newly issued secured notes, a reduction of outstanding principal of $ 2,469 million.

On September 30, 2022, the Company closed a series of transactions whereby it exchanged (the “Exchange Offer”) validly tendered senior unsecured notes with an aggregate outstanding principal balance of $ 5,594 million (collectively, the “Existing Unsecured Senior Notes”) for $ 3,125 million in aggregate principal balance of newly issued secured notes, a reduction of outstanding principal of $ 2,469 million.

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 indirect 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)

9.00 % Senior Notes due 2025

9.25 % Senior Notes due 2026

8.50 % Senior Notes due 2027

7.00 % Senior Notes due 2028

5.00 % Senior Notes due 2028

7.25 % Senior Notes due 2029

6.25 % Senior Notes due 2029

5.00 % Senior Notes due 2029

5.25 % Senior Notes due 2030

5.25 % Senior Notes due 2031

Total $ 5,594

In connection with the Exchange Offer and following receipt of the requisite number of consents from noteholders, the Company and the applicable notes trustee, executed supplemental indentures to amend each of the indentures governing the 9.25 % Senior Notes due 2026, 8.50 % Senior Notes due 2027, 5.00 % Senior Notes due 2028, 7.00 % Senior Notes due 2028 and 7.25 % Senior Notes due 2029, which amendments eliminate substantially all of the restrictive covenants as well as certain events of default and related provisions applicable to such series of notes.

(“Intermediate Holdco”), an existing indirect 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.

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.

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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.

For the three months ended September 30, 2022, the Company recorded a gain of $ 570 million, net of third party fees of $ 25 million, in connection with the Exchange Offer.

In connection with the Exchange Offer during 2022, the Company recorded a gain of $ 570 million, net of third party fees of $ 25 million.

The 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.

Further details of the New Secured Notes are discussed below.

During 2023, the Company made contractual interest payments of $ 321 million related to the New Secured Notes, of which $ 282 million was recorded as a reduction of the premium .

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.

(“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

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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 and $ 25 million of issued and outstanding letters of credit on the 2027 Revolving Credit Facility.

As of December 31, 2023, the Company had no outstanding borrowings and had $ 23 million of issued and outstanding letters of credit 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:

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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).

(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.

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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.

On November 29, 2022, the Company designated 1261229 B.C.

Ltd., the entity that directly or indirectly holds approximately 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 debt documents.

The Credit Agreement Refinancing contains provisions that were designed to facilitate the B+L Separation.

As of December 31, 2023, 1261229 B.C.

Ltd., directly or indirectly held approximately 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 debt documents.

In connection therewith, all of the subsidiaries of 1261229 B.C.

Ltd., including Bausch + Lomb and its subsidiaries, are also now unrestricted subsidiaries of the Company and, as a result, are no longer subject to the covenants under the Bausch Health debt documents, and the earnings and debt of Bausch + Lomb, as defined in the relevant debt documents, are also not included in the calculation of the Company’s financial maintenance covenant.

Ltd., including Bausch + Lomb and its subsidiaries, are unrestricted subsidiaries of the Company and, as a result, are not subject to the covenants under the Bausch Health debt documents, and the earnings and net debt of Bausch + Lomb, as defined in the relevant debt documents, are also not included in the calculation of the Company’s financial maintenance covenant.

Accounts Receivable Credit Facility

On June 30, 2023, certain subsidiaries of the Company entered into a Credit and Security Agreement (as amended, 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 for general corporate purposes.

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.

The AR Facility Agreement contains customary events of default, representations and warranties and affirmative and negative covenants primarily applicable to the borrower thereunder, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, dividends and other distributions, and engaging in any business other than as set forth in the AR Facility Agreement.

Upon the occurrence and during the continuance of an Amortization Event (as defined in the AR Facility Agreement), including the occurrence of an Event of Default (under and as defined in the 2022 Amended Credit Agreement), and subsequent demand by the Administrative Agent (acting at the direction of the Lenders), the outstanding advances and all other obligations under the AR Facility Agreement will be due and payable.

The AR Credit Facility matures on January 28, 2028.

As of December 31, 2023, there were $ 350 million of outstanding borrowings under the AR Credit Facility at an all-in interest rate of 11.99 %.

Fees incurred with the lenders, their affiliates and other third parties of approximately $ 20 million associated with the AR Credit Facility were capitalized as deferred financing costs and will be amortized as Interest expense over the term of the AR Facility Agreement.

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 may 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”).

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 B+L October 2028 Secured Notes (as defined below) were used to finance the $ 1,750 million upfront payment related to the XIIDRA Acquisition (as discussed further in Note 3, “ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE”) 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 the 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.

As of December 31, 2022, Bausch + Lomb had no outstanding borrowings, $ 24 million of issued and outstanding letters of credit and remaining availability of $ 476 million under its Revolving Credit Facility.

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.

The B+L Revolving Credit Facility is a source of funding for Bausch + Lomb and its subsidiaries only.

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.

Borrowings under the B+L Revolving Credit Facility in:

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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 %.

Term SOFR-based borrowings under the Revolving Credit Facility 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:

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dollar base rate or Canadian dollar prime rate borrowings and between 1.75 % to 2.75 % with respect to 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.

(x) Bausch + Lomb’s senior unsecured non-credit-enhanced long term indebtedness for borrowed money receives an investment grade rating from at least two of Standard & Poor’s, Moody’s and Fitch and (y) the B+L May 2027 Term Loan B Facility and the B+L September 2028 Term Loan B Facility have been repaid in full in cash (the “IG Trigger”), between 0.015 % to 0.475 % with respect to U.S.

dollar base rate or Canadian dollar prime rate borrowings and between 1.015 % to 1.475 % with respect to SOFR, EURIBOR, SONIA or 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.

The stated rate of interest for borrowings under the Revolving Credit Facility at December 31, 2023 ranges from 8.19 % to 8.21 % per annum.

In addition, Bausch + Lomb is required to pay commitment fees of 0.25 % per annum in respect of the unutilized commitments under the B+L Revolving Credit Facility, payable quarterly in arrears until the IG Trigger and, thereafter, a facility fee between 0.110 % to 0.275 % of the total revolving commitments, whether used or unused, based on Bausch + Lomb’s debt rating and payable quarterly in arrears.

Bausch + Lomb is also required to pay letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on SOFR borrowings under the 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 U.S.

Borrowings under the B+L May 2027 Term Loan B Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either:

(i) a term SOFR-based rate, plus an applicable margin of 3.25 % or (ii) a U.S.

dollar base rate, plus an applicable margin of 2.25 % (provided, however, that the term SOFR-based rate shall be no less than 0.50 % per annum at any time and the U.S.

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Term SOFR-based loans are subject to a credit spread adjustment of 0.10 %.

The stated rate of interest under the Term Facility at December 31, 2022 was 7.84 % per annum.

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).

The stated rate of interest under the B+L May 2027 Term Loan B Facility at December 31, 2023 was 8.71 % per annum.

Borrowings under the B+L September 2028 Term Loan B Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either:

(i) a term SOFR-based rate, plus an applicable margin of 4.00 %, or (ii) a U.S.

dollar base rate, plus an applicable margin of 3.00 % (provided, however, that the term SOFR-based rate shall be no less than 0.00 % per annum at any time and the U.S.

dollar base rate shall not be lower than 1.00 % per annum at any time).

Term SOFR-based borrowings under the B+L September 2028 Term Facility are not subject to any credit spread adjustment.

The stated rate of interest under the B+L September 2028 Term Loan B Facility as of December 31, 2023 was 9.36 % per annum.

Subject to certain exceptions and customary baskets set forth in the B+L Amended Credit Agreement, Bausch + Lomb is required to make mandatory prepayments of the loans under the B+L May 2027 Term Loan B Facility and the B+L September 2028 Term Loan B 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 Amended Credit Agreement), (iii) 50 % of Excess Cash Flow (as defined in the B+L Amended Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100 % of net cash proceeds from asset sales (subject to reinvestment rights, decrease based on leverage ratios and net proceeds threshold).

These mandatory prepayments may be used to satisfy future amortization.

The amortization rate for the B+L Term Facility is 1.00 % per annum, or $ 25 million, and the first installment was paid on September 30, 2022.

The amortization rate for the B+L May 2027 Term Loan B Facility is 1.00 % per annum, or $ 25 million, payable in quarterly installments.

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 B+L 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 remaining mandatory quarterly amortization payments for the B+L May 2027 Term Loan B Facility were $ 81 million through March 2027, with the remaining term loan balance being due in May 2027.

The amortization rate for the B+L September 2028 Term Loan B Facility is 1.00 % per annum, or $ 5 million, payable in quarterly installments.

Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity.

As of December 31, 2023, the remaining mandatory quarterly amortization payments for the B+L September 2028 Term Loan B Facility were $ 23 million through June 2028, with the remaining term loan balance being due in September 2028.

Senior Secured Notes

The Senior Secured Notes are guaranteed by each of the Company’s subsidiaries that is a guarantor under the 2022 Amended Credit Agreement and existing Senior Unsecured Notes (together, the “Note Guarantors”).

In connection with the closing of the B+L IPO, the redemption of the Company’s 6.125 % Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes” and the related indenture, the “April 2025 Unsecured Notes Indenture”) (as discussed below) and the related release in respect of the 2018 Restated Credit Agreement, 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.

In connection with the closing of the B+L IPO, the redemption of the Company’s 6.125 % Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes”) (as discussed below) and the related release in respect of the 2018 Restated Credit Agreement, 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.

The Senior Secured Notes and the guarantees related thereto are senior obligations and are secured, subject to permitted liens and certain other exceptions, by the same first priority liens that secure the Company’s obligations under the 2022 Amended Credit Agreement under the terms of the indentures governing the Senior Secured Notes.

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6.500 % Senior Secured Notes due 2022 and 7.00 % Senior Secured Notes due 2024

In March 2017, the Company issued $ 1,250 million aggregate principal amount of 6.500 % senior secured notes due March 15, 2022 (the “March 2022 Secured Notes”) and $ 2,000 million aggregate principal amount of 7.000 % senior secured notes due March 15, 2024 (the “March 2024 Secured Notes”), in a private placement.

In March 2017, the Company issued $ 2,000 million aggregate principal amount of 7.000 % senior secured notes due March 15, 2024 (the “March 2024 Secured Notes”), in a private placement.

Interest on these notes is payable semi-annually in arrears on each March 15 and September 15.

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

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

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9.00 % Intermediate Holdco Senior 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 interest payable semi-annually in arrears on each January 30 and July 30.

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 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, 2023 were comprised of 38.5 % ( 135,099,643 shares) of the issued and outstanding common shares of Bausch + Lomb.

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.

B+L 8.375 % Senior Secured Notes due 2028 - September 2023 Financing

On September 29, 2023, Bausch + Lomb issued $ 1,400 million aggregate principal amount of 8.375 % Senior Secured Notes due October 2028 (the “B+L October 2028 Secured Notes”).

A portion of the proceeds from the B+L October 2028 Secured Notes, along with the proceeds of the September 2028 Term Loan B Facility, were used to finance the $ 1,750 million upfront payment related to the acquisition of XIIDRA ® and certain other ophthalmology assets from Novartis (as discussed in Note 3, “ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE”) 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.

The B+L October 2028 Secured Notes are guaranteed by each of Bausch + Lomb’s subsidiaries that is a guarantor under the B+L Amended Credit Agreement (the “Note Guarantors”).

The B+L October 2028 Secured Notes and the guarantees related thereto are senior obligations and are secured, subject to permitted liens and certain other exceptions, by the same first priority liens that secure Bausch + Lomb’s obligations under the B+L Amended Credit Agreement under the terms of the indentures governing the B+L October 2028 Secured Notes.

The B+L October 2028 Secured Notes and the guarantees related thereto rank equally in right of repayment with all of Bausch + Lomb’s and Note Guarantors’ respective existing and future unsubordinated indebtedness and senior to Bausch + Lomb’s and Note Guarantors’ respective future subordinated indebtedness.

The Senior Secured Notes and the guarantees related thereto are effectively pari passu with Bausch + Lomb’s and the Note Guarantors’ respective existing and future indebtedness secured by a first priority lien on the collateral securing the B+L October 2028 Secured Notes and effectively senior to Bausch + Lomb’s and the Note Guarantors’ respective existing and future indebtedness that is unsecured, or that is secured by junior liens, in each case to the extent of the value of the collateral.

In addition, the B+L October 2028 Secured Notes are structurally subordinated to:

(i) all liabilities of any of Bausch + Lomb’s subsidiaries that do not guarantee the B+L Senior Secured Notes and (ii) any of Bausch + Lomb’s debt that is secured by assets that are not collateral.

Upon the occurrence of a change in control (as defined in the indentures governing the B+L October 2028 Secured Notes), unless Bausch + Lomb has exercised its right to redeem all of the notes of a series, holders of the B+L October 2028

Secured Notes may require Bausch + Lomb 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, but not including, the date of purchase.

The B+L October 2028 Secured Notes are redeemable at the option of Bausch + Lomb, in whole or in part, at any time on or after October 1, 2025, at the redemption prices set forth in the indenture.

Prior to October 1, 2025, Bausch + Lomb may redeem the B+L October 2028 Secured Notes in whole or in part at a redemption price equal to the principal amount of the Notes redeemed plus a make-whole premium.

Prior to October 1, 2025, Bausch + Lomb may, on any one or more occasions redeem up to 40 % of the aggregate principal amount of the October 2028 Secured Notes at a redemption price of 108.375 % of the principal amount thereof, redeemed plus accrued and unpaid interest to, but not including, the date of redemption with the proceeds of one of more equity offerings.

Senior Unsecured Notes

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6.125 % Senior Unsecured Notes due 2025

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

The March 2023 Unsecured Notes accrued interest at the rate of 5.500 % per year, payable semi-annually in arrears.

Throughout 2020, the Company repurchased, in aggregate, $ 169 million of March 2023 Unsecured Notes using cash on hand.

The Company repurchased the remaining outstanding balance of $ 233 million in December 2020 as part of the December 2020 Refinancing Transactions (as defined below).

5.375 % Senior Unsecured Notes due 2020, 5.875 % Senior Unsecured Notes due 2023, 4.500 % Senior Unsecured Notes due 2023 and 6.125 % Senior Unsecured Notes due 2025

On March 27, 2015, VRX Escrow Corp., a newly formed wholly owned subsidiary of the Company, issued $ 2,000 million aggregate principal amount of 5.375 % Senior Unsecured Notes due 2020 (the “March 2020 Unsecured Notes”), $ 3,250 million aggregate principal amount of May 2023 Unsecured Notes, € 1,500 million aggregate principal amount of 4.500 % Senior Unsecured Notes due 2023 (the “Euro Notes”) and $ 3,250 million aggregate principal amount of 6.125 % Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes” and, together with the March 2020 Unsecured Notes”, the May 2023 Unsecured Notes and the Euro Notes) in a private placement.

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

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

On March 27, 2015, VRX Escrow Corp., a newly formed wholly owned subsidiary of the Company, issued $ 3,250 million aggregate principal amount of 6.125 % Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes”) in a private placement.

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

On January 16, 2020, the Company redeemed $ 1,240 million aggregate principal amount of the May 2023 Unsecured Notes.

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

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

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

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On September 30, 2022, $ 541 million in aggregate principal balance of the December 2025 Unsecured Notes were validly tendered and accepted by the Company in connection with the Exchange Offer noted above.

In December 2023, $ 4 million in aggregate principal balance of the December 2025 Unsecured Notes were purchased in the open market and retired.

9.250 % Senior Unsecured Notes due 2026

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

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

All fees and expenses associated with these transactions were paid with cash on hand.

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

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On September 30, 2022, $ 752 million in aggregate principal balance of the April 2026 Unsecured Notes were validly tendered and accepted by the Company in connection with the Exchange Offer noted above.

In December 2023, $ 4 million in aggregate principal balance of the April 2026 Unsecured Notes were purchased in the open market and retired.

8.500 % Senior Unsecured Notes due 2027

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Interest on the May 2029 Unsecured Notes is payable semi-annually in arrears on each May 30 and November 30.

The 7.000 % January 2028 Unsecured Notes and the May 2029 Unsecured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after January 15, 2023 and May 30, 2024, respectively, at the redemption prices set forth in the respective indenture.

The Company may redeem some or all of the 7.000 % January 2028 Unsecured Notes or the May 2029 Unsecured Notes prior to January 15, 2023 and May 30, 2024, respectively, at a price equal to 100 % of the principal amount thereof plus a “make-whole” premium.

The 7.000 % January 2028 Unsecured Notes are redeemable at the option of the Company, in whole or in part, at any time and the May 2029 Unsecured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after May 30, 2024, at the redemption prices set forth in the respective indentures.

The Company may redeem some or all of the May 2029 Unsecured Notes prior to May 30, 2024, at a price equal to 100 % of the principal amount thereof plus a “make-whole” premium.

On September 30, 2022, $ 540 million and $ 373 million in aggregate principal balance of the 7.000 % January 2028 Unsecured Notes and 7.250 % May 2029 Unsecured Notes, respectively, were validly tendered and accepted by the Company in connection with the Exchange Offer noted above.

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Interest on the January 2030 Unsecured Notes is payable semi-annually in arrears on each January 30 and July 30.

The 5.000 % January 2028 Unsecured Notes and the January 2030 Unsecured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after January 30, 2023 and January 30, 2025, respectively, at the redemption prices set forth in the respective indenture.

The Company may redeem some or all of the 5.000 % January 2028 Unsecured Notes or the January 2030 Unsecured Notes prior to January 30, 2023 and January 30, 2025, respectively, at a price equal to 100 % of the principal amount thereof plus a “make-whole” premium.

On September 30, 2022, $ 710 million and $ 332 million in aggregate principal balance of the 5.000 % January 2028 Unsecured Notes and 5.250 % January 2030 Unsecured Notes, respectively, were validly tendered and accepted by the Company in connection with the Exchange Offer noted above.

The 5.000 % January 2028 Unsecured Notes are redeemable at the option of the Company, in whole or in part, at any time and the January 2030 Unsecured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after

January 30, 2025, at the redemption prices set forth in the respective indentures.

The Company may redeem some or all of the January 2030 Unsecured Notes prior to January 30, 2025 at a price equal to 100 % of the principal amount thereof plus a “make-whole” premium.

On September 30, 2022, $ 710 million and $ 332 million in aggregate principal balance of the 5.000 % January 2028 Unsecured Notes and the January 2030 Unsecured Notes, respectively, were validly tendered and accepted by the Company in connection with the Exchange Offer noted above.

6.250 % Senior Unsecured Notes due 2029

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The proceeds and cash on hand were used to:

(i) repurchase $ 1,250 million aggregate principal amount of the outstanding March 2022 Secured Notes, (ii) prepay $ 303 million of mandatory amortization scheduled for payment in 2022 under the Company’s June 2025 and November 2025 Term Loan B Facilities and (iii) pay all fees and expenses associated with these transactions (collectively, the “May 2020 Refinancing Transactions”).

The May 2020 Refinancing Transactions were accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $ 27 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value.

The 6.250 % February 2029 Unsecured Notes accrue interest at the rate of 6.250 % per year, payable semi-annually in arrears on each of February 15 and August 15.

(i) repurchase $ 1,250 million aggregate principal amount of the outstanding March 2022 Secured Notes, (ii) prepay $ 303 million of mandatory amortization scheduled for payment in 2022 under the Company’s June 2025 and November 2025 Term Loan B Facilities and (iii) pay all fees and expenses associated with these transactions, The 6.250 % February 2029 Unsecured Notes accrue interest at the rate of 6.250 % per year, payable semi-annually in arrears on each of February 15 and August 15.

The Company may redeem all or a portion of the 6.250 % February 2029 Unsecured Notes at any time prior to February 15, 2024, at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium.

In addition, at any time prior to August 15, 2023, the Company may redeem up to 40 % of the aggregate principal amount of the outstanding 6.250 % February 2029 Unsecured Notes with the net proceeds of certain equity offerings at the redemption price set forth in the 6.250 % February 2029 Unsecured Notes indenture.

On or after February 15, 2024, the Company may redeem all or a portion of the 6.250 % February 2029 Unsecured Notes at the applicable redemption prices set forth in the 6.250 % February 2029 Unsecured Notes indenture, plus accrued and unpaid interest to, but not including, the date of redemption.

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On December 3, 2020, the Company issued $ 1,000 million aggregate principal amount of 5.000 % Senior Unsecured Notes due February 2029 (the “ 5.000 % February 2029 Unsecured Notes”) and $ 1,000 million aggregate principal amount of 5.250 % Senior Unsecured Notes due February 2031 (the “February 2031 Unsecured Notes”) in a private placement.

The aggregate proceeds and cash on hand were used to repurchase the remaining outstanding principal amounts of:

(i) € 1,500 million of the Euro Notes, (ii) $ 233 million of the March 2023 Unsecured Notes and (iii) pay all fees and expenses associated with these transactions (collectively, the “December 2020 Refinancing Transactions”).

The December 2020 Refinancing Transactions were accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $ 7 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value.

The 5.000 % February 2029 Unsecured Notes accrue interest at the rate of 5.000 % per year, payable semi-annually in arrears on each of February 15 and August 15.

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The weighted average stated rate of interest for the Company’s outstanding debt obligations as of December 31, 2023 and 2022 was 8.05 % and 7.74 %, respectively.

Due to the accounting treatment for the New Secured Notes, interest expense in the Company’s financial statements for 2022 and in future periods will not be representative of the weighted average stated rate of interest.

Due to the accounting treatment for the New Secured Notes, interest expense in the Company’s financial statements for 2023 and 2022, and in future periods will not be representative of the weighted average stated rate of interest.

Gain (Loss) on Extinguishment of Debt

In December 2023, the Company, through a series of transactions repurchased and retired outstanding senior unsecured notes with an aggregate par value of $ 8 million in the open market, for an aggregate cost of $ 7 million and recognized a net gain of approximately $ 1 million.

In June 2022 and December 2022, the Company repurchased and retired certain outstanding Senior Notes with an aggregate par value of $ 927 million in the open market, for an aggregate cost of $ 550 million.

In connection with these repurchases, the Company recognized a gain of $ 369 million, net of write-offs of debt premiums, discounts and deferred

issuance costs, on extinguishment of debt which represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

In connection with these repurchases, the Company recognized a gain of $ 369 million, net of write-offs of debt premiums, discounts and deferred issuance costs, on extinguishment of debt which represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

In September 2022, the Company completed the Exchange Offer and recorded a net gain on extinguishment of debt of $ 570 million as described above.

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Benefits paid ( 16 ) ( 11 ) ( 4 ) ( 4 ) ( 3 ) ( 4 )

Actuarial gain ( 36 ) ( 6 ) ( 54 ) ( 8 ) ( 5 ) ( 2 )

Actuarial loss (gain) 3 ( 36 ) 8 ( 54 ) — ( 5 )

Currency translation adjustments — — 4 ( 15 ) — —

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These contributions are determined based upon recommendations made by the actuary under accepted actuarial principles.

In 2023, the Company expects to contribute $ 0 , $ 4 million and $ 4 million to the U.S.

In 2024, the Company expects to contribute $ 4 million, $ 4 million and $ 3 million to the U.S.

pension benefit plan, the non-U.S.

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They take into account historical relationships, but are adjusted to reflect expected capital market trends.

The expected return on plan assets for the Company’s U.S.

pension plan for 2022 was 4.50 %.

The expected return on plan assets for the Company’s Ireland pension plans was 2.75 % for 2022.

The discount rate used to determine benefit obligations represents the current rate at which the benefit plan liabilities could be effectively settled considering the timing of expected payments for plan participants.

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The Company contributed $ 49 million, $ 47 million and $ 44 million to these plans during the years ended December 31, 2023, 2022 and 2021, respectively.

Right-of-use assets and lease liabilities associated with the Company’s operating leases are included in the Consolidated Balance Sheet as of December 31, 2022 and 2021 as follows:

Right-of-use assets and lease liabilities associated with the Company’s operating leases are included in the Consolidated Balance Sheets as of December 31, 2023 and 2022 as follows:

(in millions) 2023 2022

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As of December 31, 2023, 2022 and 2021 the Company’s finance leases were no t material and for the years 2023, 2022 and 2021, sub-lease income and short-term lease expense were no t material.

In December 2023, the Company exercised an option to early terminate the lease period for an office building in Bridgewater, New Jersey.

As a result, the Company recognized a net charge of $ 12 million, representing adjustment to the lease liability to reduce it to the amount related to the remaining lease term, write-off of the right-of-use asset and a charge for a required termination payment.

Lease expense for the years 2023, 2022 and 2021 include:

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Other information related to operating leases for 2023, 2022 and 2021 is as follows:

(dollars in millions) 2022 2021 2020

(in millions) 2023 2022 2021

Cash paid from operating cash flows for amounts included in the measurement of lease liabilities $ 73 $ 70 $ 76

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Bausch Health’s Long-Term Incentive Plan

In May 2014, shareholders approved Bausch Health’s 2014 Omnibus Incentive Plan (the “2014 Plan”), which replaced the Company’s 2011 Omnibus Incentive Plan (the “2011 Plan”) for future equity awards granted by the Company.

In May 2014, shareholders approved Bausch Health’s 2014 Omnibus Incentive Plan (the “2014 Plan”) which replaced Bausch Health’s 2011 Omnibus Incentive Plan (the “2011 Plan”) for future equity awards granted by the Company.

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

The maximum number of common shares that may be issued to participants under the 2014 Plan was equal to 18,000,000 common shares, plus the number of common shares under the 2011 Plan reserved but unissued and not underlying outstanding awards and the

number of common shares becoming available for reuse after awards are terminated, forfeited, cancelled, exchanged or surrendered under the 2011 Plan and the Company’s 2007 Equity Compensation Plan.

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

The 2014 Plan was amended and restated effective April 30, 2018 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan.

Effective April 28, 2020, Bausch Health further amended and restated the Amended and Restated 2014 Plan (the “Further Amended and Restated 2014 Plan”).

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

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

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

Effective June 21, 2022, Bausch Health further amended and restated the 2014 Plan, as subsequently amended and restated (the “Amended and Restated 2014 Plan”).

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

The 2014 Plan was amended and restated effective April 30, 2018, April 28, 2020 and June 21, 2022 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan.

Effective May 16, 2023, Bausch Health further amended and restated the 2014 Plan, as subsequently amended and restated (the “Amended and Restated 2014 Plan”).

Such amendment and restatement increased the number of common shares authorized for issuance under the Amended and Restated 2014 Plan by an additional 7,500,000 common shares, among other things.

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The Company uses reserved and unissued common shares to satisfy its obligation under its share-based compensation plans.

Bausch Health has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with the Company’s focus on improving its tangible capital usage and allocation, while maintaining focus on improving total shareholder return over the long-term.

Bausch Health has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with the Company’s focus on generating operating cash flow while maintaining focus on improving total shareholder return over the long-term.

The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based RSUs and performance-based RSUs.

Performance-based RSUs are comprised of:

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

In order to retain and incentivize certain members of Bausch Health’s senior leadership team, on September 5, 2022, the Talent and Compensation Committee of the Board of Directors approved a retention program for certain executive officers and other members of leadership.

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The weighted-average fair values of all stock options granted in 2023, 2022 and 2021 were $ 4.87 , $ 6.60 and $ 10.92 , respectively.

The total intrinsic values of stock options exercised in 2022, 2021 and 2020 were $ 1 million, $ 15 million and $ 2 million, respectively.

Proceeds received on the exercise of stock options in 2022, 2021 and 2020 were $ 3 million, $ 22 million and $ 5 million, respectively.

The total intrinsic values of stock options exercised in 2023, 2022 and 2021 were $ 0 , $ 1 million and $ 15 million, respectively.

Proceeds received on the exercise of stock options in 2023, 2022 and 2021 were $ 0 , $ 3 million and $ 22 million, respectively.

As of December 31, 2023, the total remaining unrecognized compensation expense related to non-vested stock options amounted to $ 6 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.5 years.

The total fair value of stock options vested in 2022, 2021 and 2020 were $ 15 million, $ 15 million and $ 15 million, respectively.

RSUs generally vest on the first or third anniversary date from the date of grant or 33 % a year over a three-year period.

RSUs generally vest 33 % a year over a three-year period.

Annual RSUs granted to non-management directors vest immediately prior to the next Annual Meeting of Shareholders.

Pursuant to the applicable unit agreement, certain RSUs may be subject to the attainment of any applicable performance goals specified by the Board of Directors.

Pursuant to the applicable RSU agreement, certain RSUs may be subject to the attainment of any applicable performance goals specified by the Board of Directors.

If the vesting of the RSUs is conditional upon the attainment of performance goals, any RSUs that do not vest as a result of a determination that the prescribed performance goals failed to be attained will be forfeited immediately upon such determination.

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

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

common shares on the vesting date for each vested RSU.

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

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Each vested performance-based RSU represents the right of a holder to receive a number of the Company’s common shares up to a specified maximum.

Performance-based RSUs vest upon achievement of certain share price appreciation conditions or attainment of certain performance targets.

Performance-based RSUs vest upon the attainment of certain performance targets and the achievement of certain share price appreciation conditions.

If the Company’s performance is below a specified performance level, no common shares will be paid.

The fair value of each TSR performance-based RSU granted during 2022, 2021 and 2020 was estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved.

The fair value of the ROTC performance-based RSUs is estimated based on the trading price of the Company’s common shares on the date of grant.

Expense recognized for the ROTC performance-based RSUs in each reporting period reflects the Company’s latest estimate of the number of ROTC performance-based RSUs that are expected to vest.

If the ROTC performance-based RSUs do not ultimately vest due to the ROTC targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

The fair value of each Adjusted Operating Cash Flow performance-based RSU and TSR performance-based RSU granted during 2023 and 2021, respectively, was estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved.

For the ROTC performance-based RSUs granted in 2022 and 2021, the fair value was estimated based on the trading price of the Company’s common shares on the date of grant.

Expense recognized for the performance-based RSUs in each reporting period reflects the Company’s latest estimate of the number of performance-based RSUs that are expected to vest.

If the performance-based RSUs do not ultimately vest due to the targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

There were no TSR performance-based RSUs granted in 2022.

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Non-vested, December 31, 2023 0.7 $ 10.57

During 2022, the Company granted approximately 369,000 performance-based RSUs, consisting of ROTC performance-based RSUs with a weighted-average grant date fair value of $ 9.40 per RSU.

As of December 31, 2023, the total remaining unrecognized compensation expense related to non-vested performance-based RSUs amounted to $ 5 million, which will be amortized over the weighted-average remaining requisite service period of approximately 2.2 years.

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Prior to May 5, 2022, Bausch + Lomb participated in Bausch Health’s long-term incentive program.

Effective May 5, 2022, Bausch + Lomb established the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan (the “B+L Plan”).

A total of 28,000,000 common shares of Bausch + Lomb are authorized under the B+L Plan.

The B+L Plan provides for the grant of various types of awards including RSUs, stock appreciation rights, stock options, performance-based awards and cash awards.

Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date.

Effective May 5, 2022, Bausch + Lomb established the Omnibus Plan (the “B+L Plan”).

Effective April 24, 2023, Bausch + Lomb’s shareholders approved an amendment and restatement of the Plan to increase the number of shares authorized for issuance thereunder by an additional 10,000,000 common shares, resulting in an aggregate 38,000,000 common shares of Bausch + Lomb are authorized under the B+L Plan.

The B+L Plan provides for the grant of various types of awards, including RSUs, restricted stock, stock appreciation rights, stock options, performance-based awards and cash awards.

Under the B+L Plan,

the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date.

Generally, stock options have a term of ten years and a three-year vesting period, subject to limited exceptions.

Share-based awards granted to senior management align with Bausch + Lomb’s focus on enhancing its revenue growth while maintaining focus on total shareholder return over the long-term.

The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based RSUs and performance-based RSUs (“PSUs”).

The PSUs are comprised of awards that vest upon:

(i) achievement of certain share price appreciation conditions, including absolute and relative total shareholder return (“TSR”) (the “TSR PSUs”) and (ii) attainment of certain performance targets that are based on Bausch + Lomb’s Organic Revenue Growth (the “Organic Revenue Growth PSUs”).

If Bausch + Lomb’s performance is below a specified performance level, no common shares will be paid.

Each vested PSU represents the right of a holder to receive a number of Bausch + Lomb’s common shares up to a specified maximum.

On May 5, 2022, in connection with the B+L IPO, Bausch + Lomb granted certain awards to certain eligible recipients (the “IPO Founder Grants”).

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The IPO Founder grants in the form of stock options have a three-year graded vesting period and the IPO Founder RSUs vest 50 % in the second year and 50 % in the third year after the grant.

With the exception of the separation agreement and retention program, as discussed below, vesting of the IPO Founder Grants are linked to the completion of the B+L Separation and expense recognition will begin near the time of the B+L Separation.

On July 19, 2022, Bausch + Lomb entered into a separation agreement in connection with the departure of its Chief Executive Officer (“CEO”).

Under the terms of the separation agreement, the CEO’s IPO Founder Grants in the form of RSUs will vest upon his termination of service date (pro rated based on his period of service relative to the original three-year vesting period associated with such grants), but the shares received upon settlement will remain fully restricted and nontransferable until the earliest to occur of the distribution date, a change in control, the date the Board determines that Bausch Health will no longer pursue a distribution, and the two-year anniversary of the CEO’s termination of service date (such applicable date, the “Unrestricted Date”).

Under the terms of the separation agreement, the CEO’s IPO Founder Grants in the form of stock options will vest and become exercisable (pro-rated based on his period of service relative to the original three-year vesting period associated with such grants) upon the Unrestricted Date and will remain exercisable for two years following this date.

On December 22, 2022, Bausch + Lomb entered into an Amended and Restated Separation Agreement (the “A&R Separation Agreement”) in connection with the departure of Bausch + Lomb’s CEO.

Under the A&R Separation Agreement, Bausch + Lomb’s CEO agreed to continue serving as CEO until at least March 4, 2023 and lasting until such date as the Board determines in its discretion or his successor is appointed, but no later than June 30, 2023.

On the CEO’s termination date, in lieu of pro-rated vesting, partial vesting of a set number of the CEO’s IPO Founder Grants, in the amount of:

(a) 315,592 of the CEO’s IPO Founder Grants in the form of restricted stock units will accelerate and vest, but the shares received upon settlement will still remain fully restricted and nontransferable until the Unrestricted Date and (b)

1,248,496 of the CEO’s IPO Founder Grants in the form of stock options will remain eligible to vest upon the Unrestricted Date and remain exercisable for two years following the Unrestricted Date.

As discussed below, vesting of the IPO Founder Grants are linked to the completion of the B+L Separation and expense recognition will begin near the time of the B+L Separation.

During the third quarter of 2022, the Talent and Compensation Committee of the Bausch + Lomb Board of Directors approved a retention program that includes Bausch + Lomb’s named executive officers (other than the CEO) and certain other employees.

This program provides these Executive Officers (other than the CEO), among other benefits, pro-rata vesting of the IPO Founder Grants previously issued to these named executives, subject to certain restrictions, in the event of an involuntary termination of employment by Bausch + Lomb without “cause” or the executive’s resignation for “good reason”, in each case within the one-year anniversary of Bausch + Lomb’s appointment of the successor to the CEO (pro-rated based on the period of service relative to the original three-year vesting period associated with such grants).

This program provides these Executive Officers (other than the CEO), for among other benefits, pro-rata vesting of the IPO Founder Grants previously issued to these named executives, subject to certain restrictions, in the event of an involuntary termination of employment by Bausch + Lomb without “cause” or the employee’s resignation for “good reason”, in each case within the one-year anniversary of Bausch + Lomb’s appointment of the successor to the CEO (pro-rated based on the period of service relative to the original three-year vesting period associated with such grants).

However, the IPO Founder Grants in the form of RSUs (while settled in connection with the termination of employment) will not be transferrable until, and the IPO Founder Grants in the form of stock options will not be exercisable until, the earliest to occur of:

(i) the date the spinoff distribution is completed, (ii) a “change in control” (as defined in the applicable retention award letter), (iii) the date the Board of Directors of the Company determines that it will no longer pursue the spinoff distribution and (iv) the two-year anniversary of the executive’s termination of employment and the IPO Founder Grants in the form of stock options will be exercisable for two years following the later of this date and the termination date Additionally, these named executive officers (other than the CEO) and certain other employees were granted a one-time award of approximately 850,000 RSUs under the retention program pursuant to Bausch + Lomb’s 2022 Omnibus Incentive Plan.

(i) the date the spinoff distribution is completed, (ii) a “change in control” (as defined in the applicable retention award letter), (iii) the date the Board of Directors of the Company determines that it will no longer pursue the spinoff distribution and (iv) the two-year anniversary of the executive’s termination of employment and the IPO Founder Grants in the form of stock options will be exercisable for two years following the later of this date and the termination date Additionally, these named executive officers (other than the CEO) and certain other employees were granted a one-time award of approximately 850,000 RSUs in the aggregate under the retention program pursuant to Bausch + Lomb’s 2022 Omnibus Incentive Plan.

The retention grant will generally vest in 1/3 installments on each of the first three anniversaries of the grant date based on continuous employment with Bausch + Lomb.

On February 15, 2023, Bausch + Lomb announced the appointment of Brent Saunders as its Chief Executive Officer and Chair of the Board of Directors of Bausch + Lomb, effective March 6, 2023.

Pursuant to Mr.

Saunders’ employment agreement, on February 23, 2023, Mr.

Saunders was granted the following equity grants under the B+L Plan:

750,000 PSUs, 1,318,681 stock options and 375,000 RSUs.

The RSUs are scheduled to vest 50 % on the second anniversary of the grant date and the remaining 50 % on the third anniversary of the grant date.

The stock options are scheduled to vest in equal one-third installments on each of the first three anniversaries of the grant date.

The PSUs vest on the four th anniversary of the grant date based on Bausch + Lomb’s achievement of absolute share price hurdles, or upon achievement of absolute and relative TSR hurdles in relation to the S&P 500 Index during the four-year performance period.

Approximately 19,300,000 Bausch + Lomb common shares were available for future grants as of December 31, 2023 under the B+L Plan.

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Stock options generally vest 33 % each year over a three-year period, on the anniversary of the date of grant.

The fair values of all stock options granted under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan for the year 2022 were estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

The fair values of all stock options granted under the Bausch + Lomb Plan for the years 2023 and 2022 were estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Expected stock option life (years) 3.0 3.0

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Expected dividend yield — % — %

The expected stock option life was determined based on historical exercise and forfeiture patterns associated with historical stock options granted to Bausch + Lomb employees under BHC’s long-term incentive plan.

The expected volatility was determined based on implied and historical volatility of Bausch + Lomb’s selected peer companies.

Bausch + Lomb will continue to leverage BHC’s historical stock option experience and peer company data until it has sufficient experience with its own equity awards and market data.

Bausch + Lomb will continue to leverage the Company’s historical stock option experience and peer company data until it has sufficient experience with its own equity awards and market data.

The risk-free interest rate was determined based on the rate at the time of grant for zero-coupon U.S.

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Vested and exercisable, December 31, 2023 — $ — — $ —

The weighted-average fair values of all stock options granted in 2022 were $ 3.84 .

There were no stock options exercised in 2022.

The weighted-average fair values of stock options granted to Bausch + Lomb employees in 2023 and 2022 were $ 5.33 and $ 3.84 , respectively.

There were no stock options exercised in 2023 or 2022.

As of December 31, 2023, the total remaining unrecognized compensation expense related to non-vested stock options amounted to $ 12 million, which will be amortized over the weighted-average remaining requisite service period of approximately 2.2 years.

Unrecognized compensation does not include IPO Founder Grants as they are linked to the completion of the Separation and expense recognition will begin near the time of the separation.

There were no stock options that vested during 2022.

RSUs under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan generally vest 33 % a year over a three-year period with the exception of IPO Founder RSUs which vest 50 % in the second year and 50 % in the third year after the grant.

RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on the Bausch + Lomb’s common shares.

Time-Based RSUs

RSUs under the Bausch + Lomb Corporation Omnibus Plan generally vest 33 % a year over a three-year period with the exception of IPO Founder RSUs and the RSUs granted to Mr.

Saunders in connection with his appointment, which vest in two equal installments, such that 50 % vest on the second anniversary and 50 % vest on the third anniversary of the grant date.

RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on Bausch + Lomb’s common shares.

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

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

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

The Company’s current intent is to settle vested RSUs through the issuance of common shares.

Each vested RSU represents the right of a holder to receive one of the Company’s common shares.

The fair value of each RSU granted is estimated based on the trading price of the Company’s common shares on the date of grant.

The following table summarizes non-vested time-based RSU activity under Bausch + Lomb’s Plan during 2022:

(in millions, except per share amounts) Performance-based

RSUs Weighted-

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

The amount of cash payment will be determined based on

the average market price of Bausch + Lomb’s common shares on the vesting date.

Bausch + Lomb’s current intent is to settle vested RSUs through the issuance of common shares.

Each vested RSU represents the right of a holder to receive one of Bausch + Lomb’s common shares.

The fair value of each RSU granted is estimated based on the trading price of Bausch + Lomb’s common shares on the date of grant.

The following table summarizes non-vested RSU activity under Bausch + Lomb’s Plan during 2023:

(in millions, except per share amounts) Restricted Stock Units (RSUs) Weighted-Average

Fair Value Per Share

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Granted 3.4 $ 17.91

Vested ( 1.6 ) $ 16.86

Forfeited ( 0.7 ) $ 17.91

Non-vested, December 31, 2023 5.3 $ 17.25

As of December 31, 2022, the total remaining unrecognized compensation expense related to non-vested time-based RSUs amounted to $ 41 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.5 years.

As of December 31, 2023, the total remaining unrecognized compensation expense related to non-vested RSUs amounted to $ 46 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.8 years.

Unrecognized compensation does not include IPO Founder Grants as they are linked to the completion of the Separation and expense recognition will begin near the time of the separation.

The total fair value of time-based RSUs vested in 2022 was not material.

In addition, while Bausch + Lomb did not grant performance-based RSUs during 2022, certain Bausch + Lomb employees continued to participate in BHC’s performance-based RSUs granted prior to May 5, 2022.

The total fair value of RSUs vested in 2023 was $ 27 million.

The total fair value of RSUs vested in 2022 was no t material.

Performance-Based RSUs

Each vested PSU represents the right of a holder to receive a number of Bausch + Lomb’s common shares up to a specified maximum.

The performance-based PSUs are comprised of awards that vest upon:

(i) achievement of certain share price appreciation conditions, including absolute and relative total shareholder return and (ii) attainment of certain performance targets that are based on Bausch + Lomb’s Organic Revenue Growth.

If Bausch + Lomb’s performance is below a specified performance level, no common shares will be paid.

The maximum level of achievement of the performance goals is 200 % of the target.

The fair value of each TSR PSU granted during 2023 was estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved.

The fair value of the Organic Revenue Growth PSUs is estimated based on the trading price of Bausch + Lomb’s common shares on the date of grant.

Expense recognized for the Organic Revenue Growth PSUs in each reporting period reflects Bausch + Lomb’s latest estimate of Organic Revenue Growth in determining the number of PSUs that are expected to vest.

If the Organic Revenue Growth PSUs do not ultimately vest due to the Organic Revenue Growth targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

There were no TSR PSUs granted in 2022 and 2021.

The fair values of TSR PSUs granted during 2023 were estimated with the following assumptions:

Contractual term (years) 3.6

Expected volatility 35.4 %

Risk-free interest rate 4.5 %

The expected volatility was determined based on implied and historical volatility of Bausch + Lomb’s selected peer companies.

The risk-free interest rate was determined based on the rate at the time of grant for zero-coupon U.S.

government bonds with maturity dates equal to the contractual term of the TSR PSU.

The following table summarizes the performance-based PSU activity during 2023:

(in millions, except per share amounts) Performance-based RSUs Weighted-Average

Fair Value Per Share

Non-vested, January 1, 2023 — $ —

Granted 1.3 $ 26.61

Forfeited ( 0.1 ) $ 24.96

Non-vested, December 31, 2023 1.2 $ 26.82

During 2023, Bausch + Lomb granted approximately 1,300,000 performance-based RSUs, consisting of:

(i) approximately 1,200,000 TSR PSUs with an average grant date fair value of $ 27.65 per RSU and (ii) approximately 100,000 Organic Revenue Growth PSUs with a weighted-average grant date fair value of $ 17.96 per RSU.

As of December 31, 2023, the total remaining unrecognized compensation expense related to non-vested performance-based RSUs amounted to $ 26 million, which will be amortized over the weighted-average remaining requisite service period of approximately 2.8 years.

A maximum of approximately 3,100,000 common shares could be issued upon vesting of the performance-based RSUs outstanding as of December 31, 2023.

There were no performance-based RSUs that vested during 2023.

In addition, while Bausch + Lomb did not grant performance-based RSUs during 2022, certain Bausch + Lomb employees continued to participate in the Company’s performance-based RSUs granted prior to May 5, 2022.

As of December 31, 2023, the total remaining unrecognized compensation expense related to the Company’s non-vested performance-based RSUs was $ 0 .

ACCUMULATED OTHER COMPREHENSIVE LOSS

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dollar, except to the extent of translation adjustments related to the Company’s retained earnings for foreign jurisdictions in which the Company is not considered to be permanently reinvested.

As a result of the change in the Company’s ownership interest in Bausch + Lomb, the carrying amount of accumulated other comprehensive income was adjusted to reflect the change in the ownership interest in Bausch + Lomb through a corresponding credit of $ 137 million to equity attributable to the Company.

As a result of the change in the Company’s ownership interest in Bausch + Lomb during 2022, the carrying amount of accumulated other comprehensive income was adjusted to reflect the change in the ownership interest in Bausch + Lomb through a corresponding credit of $ 137 million to equity attributable to the Company.

RESEARCH AND DEVELOPMENT

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Acquisition-related contingent consideration 59 29 11

Acquisition-related transaction costs 24 — —

Other, net 1 1 —

Other expense, net $ 28 $ 35 $ 373

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

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

Securities Litigation, the SEC Investigation and the Canadian Securities Litigation and related opt-outs.

In 2020, Litigation and other matters also includes an insurance recovery related to a certain litigation matter.

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

Net gain on sales of assets includes $ 25 million related to the achievement of a milestone related to a certain product and a $ 26 million loss upon completion of the Amoun Sale during 2021.

In 2020, Acquired in-process research and development costs of $ 32 million, primarily consist of costs associated with the upfront payments to enter into certain exclusive licensing agreements.

In 2023, 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.

In 2021, Litigation and other matters of $ 356 million included adjustments related to the Glumetza Antitrust Litigation, partially offset by insurance recoveries related to certain litigation matters and Net gain on sales of assets included $ 25 million related to the achievement of a milestone related to a certain product and a $ 26 million loss upon completion of the Amoun Sale.

The components of Loss before income taxes for 2023, 2022 and 2021 consist of:

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Change in valuation allowance on Canadian deferred tax assets and tax rate changes

( 158 ) 24 40

Change in uncertain tax positions ( 28 ) ( 50 ) 112

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Non-deductible portion of Goodwill impairments ( 104 ) ( 175 ) ( 99 )

Tax benefit on intra-entity transfers — — ( 338 )

Other ( 1 ) 6 ( 3 )

$ ( 221 ) $ ( 83 ) $ 87

Other consists of immaterial adjustments affecting the tax provision such as those related to the filing of tax returns.

Other consists adjustments affecting the tax provision such as those related to the filing of tax returns which are not material.

Deferred tax assets and liabilities as of December 31, 2023 and 2022 consist of:

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Net deferred tax asset $ 1,936 $ 1,964

The following table presents a reconciliation of the deferred tax asset valuation allowance for 2022, 2021 and 2020:

The following table presents a reconciliation of the deferred tax asset valuation allowance:

(in millions) 2023 2022 2021

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Disallowed interest can be carried forward indefinitely and any unused interest deduction assessed for recoverability.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

The CARES Act also amended the annual limitation on the deduction of interest in the following respects:

(i) increasing the limitation to 50% of adjusted taxable income (“ATI”), (ii) providing a rule for a partnership’s 2019 section 163(j)-disallowed interest expense and (iii) allowing an election to apply 2019 ATI to the 2020 section 163(j) computation.

For corporations, the increase to 50% of ATI applies to all taxable years beginning in 2019 or 2020 and permits taxpayers whose 2020 income will decrease from its 2019 level, an election to apply their 2019 ATI, rather than their 2020 ATI, to their 2020 computation.

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

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

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

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

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

in connection with internal restructurings.

In 2023, the 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.

In 2022, the valuation allowance decreased by $ 199 million primarily due to book taxable income in Canada and the expiration of tax losses in the United States.

As of December 31, 2023 and 2022, the Company had accumulated taxable losses available to offset future years’ federal and provincial taxable income in Canada of approximately $ 6,579 million and $ 5,878 million, respectively.

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In addition, as of December 31, 2023 and 2022, pooled SR&ED expenditures available to offset against future taxable income in Canada were approximately $ 192 million and $ 188 million, respectively, which may be carried forward indefinitely.

As of December 31, 2022 and 2021, a full valuation allowance against the net Canadian deferred tax assets on the parent company has been provided of $ 1,869 million and $ 1,965 million, respectively.

As of December 31, 2023, a full valuation allowance against the net Canadian deferred tax assets on the parent company (BHCI) and the Bausch + Lomb parent company (B+L Corporate Canada) has been provided of $ 2,045 million and as of December 31, 2022, on BHCI of $ 1,869 million.

As of December 31, 2023 and 2022, the Company had accumulated taxable losses available to offset future years’ federal taxable income in the U.S.

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As of December 31, 2023 and 2022, the Company had accumulated taxable losses available to offset future years’ taxable income in Ireland of approximately $ 12,164 million and $ 10,691 million, respectively.

As of December 31, 2022, the Company continues to have a capital loss which is offset by a valuation allowance on the portion of the loss for which a benefit is not expected to be realized.

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

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subsidiaries will be permanently reinvested and not repatriated.

As of December 31, 2022, the Company estimates that there will be no tax liability

attributable to unremitted earnings of its U.S.

As of December 31, 2023, the Company estimates that there will be no tax liability attributable to unremitted earnings of its U.S.

subsidiaries.

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In 2023 and 2022, the Company recognized net increases to unrecognized tax benefits for current year tax positions of $ 6 million and $ 156 million, respectively.

The Company recognized a net reduction of $ 203 million during 2022 and a net reduction of $ 177 million during 2021 in the unrecognized tax benefits related to tax positions taken in the prior years.

The Company recognized a net increase

of $ 31 million during 2023 and a net reduction of $ 203 million during 2022 in the unrecognized tax benefits related to tax positions taken in the prior years.

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

As of December 31, 2023 and 2022, accrued interest and penalties related to unrecognized tax benefits were approximately $ 51 million and $ 32 million, respectively.

In 2022, the Company recognized a net decrease of approximately $ 9 million and, in 2021, recognized an increase of $ 8 million of interest and penalties, respectively.

In 2023, the Company recognized a net increase of approximately $ 19 million and, in 2022, recognized a decrease of $ 9 million of interest and penalties, respectively.

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

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The Company expects that the tentative settlement, if finalized without further modification, will affect the Company’s 2024 income tax provision, and while such settlement may be material to the Company’s results of operations or cash flows in the quarter in which it is recorded, will not be material to its results of operations or cash flows for the year ended December 31, 2024.

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

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

The Company believes that the CRA will open an audit cycle for the years 2018 – 2019 in 2023.

The Company settled the tax years from 2005 through 2009 with the CRA.

The Company had previously filed a Notice of Objection related to the assessment of these years and

reduced net operating losses with a full valuation allowance by CAD 44 million to close these years.

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

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

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

(a) years 2012 through 2013 (b) years 2014 through 2015, (c) years 2016 through 2017, (d) years 2018 through 2019 and (e) years 2020 through 2021.

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

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The adjustments for 2015 and 2016 will reduce NOLs currently offset by a full valuation allowance.

In December 2023, the Company settled certain transfer pricing matters related to 2017 and 2018 tax years resulting in a reduction of NOLs of approximately CAD 26 million for 2017 and CAD 15 million for 2018.

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

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

January 2023, the German tax authorities opened an audit of the Company’s subsidiaries in Germany for tax years 2017 through 2019.

On November 8, 2022, the Company’s affiliate in Netherlands received an assessment from the Luxembourg Tax Authorities as successor in interest to its affiliate in Luxembourg for tax years 2018 – 2019 for € 271.7 million.

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

The following table presents a reconciliation of the unrecognized tax benefits for 2022, 2021 and 2020:

The following table presents a reconciliation of the unrecognized tax benefits:

(in millions) 2023 2022 2021

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Certain of these proceedings and actions are described below.

Going forward, in the Company’s subsequent Quarterly Reports on Form 10-Q, the Company will only include a description of these matters to the extent there has been a material update with respect thereto during the applicable quarter or to the extent otherwise required by law.

On a quarterly basis, the Company evaluates developments in legal proceedings, potential settlements and other matters that could increase or decrease the amount of the liability accrued.

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Investigation by the U.S.

Attorney’s Office for the District of Massachusetts - re OraPharma

In August 2019, the Company received a subpoena from the U.S.

Attorney’s Office for the District of Massachusetts (Department of Justice), requesting materials including documents concerning the sales, marketing, coverage and reimbursement of Arestin ® , including related support services, and other matters.

In February 2023, the Company’s subsidiary OraPharma, Inc.

entered into a civil settlement agreement with the Department of Justice fully resolving this investigation.

Under the terms of the settlement, OraPharma, Inc.

has paid a settlement payment of $ 100,000 , plus payment of additional immaterial amounts in applicable interest and other related costs, to resolve the civil False Claims Act (“FCA”) investigation.

A related complaint brought by a former OraPharma employee pursuant to the FCA and certain state statutes will be dismissed.

Investigation by the U.S.

Attorney’s Office for the District of Iowa – re OrthoDerm

The Company received a Civil Investigative Demand in May 2021 from the Civil Division of the United States Department of Justice and the United States Attorney’s Office for the District of Iowa, requesting documents and other information concerning the sales and marketing of Bryhali ® , Duobrii ® , Jublia ® , and Siliq ® .

The Company is cooperating with this

investigation.

Attorney’s Office for the Northern District of Iowa – re OrthoDerm

The Company received a Civil Investigative Demand in May 2021 from the Civil Division of the United States Department of Justice and the United States Attorney’s Office for the Northern District of Iowa, requesting documents and other information concerning the sales and marketing of Bryhali ® , Duobrii ® , Jublia ® and Siliq ® .

The Company is cooperating with this investigation.

The Company cannot predict the outcome or the duration of this investigation or any other legal proceedings or any enforcement actions or other remedies that may be imposed on the Company arising out of this investigation.

Securities and RICO Class Actions and Related Matters

Securities Class Actions and Related Matters

Securities Litigation - Opt-Out Litigation

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15-cv-07658) (the “Securities Class Action Settlement”).

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

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

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

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

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

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

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

On May 12, 2022, the Third Circuit denied Lochridge’s petition for rehearing en banc.

The deadline for Lochridge to file a petition for a writ of certiorari with the U.S.

Supreme Court was August 10, 2022 and no petition was filed.

As such, the deadline for further appeals has passed and the settlement has become final pursuant to the stipulation of settlement.

After various appeals, and with passage of time, this settlement has become final pursuant to the stipulation of settlement.

The matter is now concluded with respect to the Company and all claims have been resolved and discharged as to the Company and its current/former officers and directors.

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

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

The allegations related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business and prospects, including relating to drug pricing, the Company’s use of specialty pharmacies, and the Company’s relationship with Philidor Rx Services, LLC (“Philidor”).

On May 31, 2016, the court entered an order consolidating the four actions under the caption In re Valeant Pharmaceuticals International, Inc.

Securities Litigation, Case No.

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

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

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

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

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

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

During 2022, the Company’s rights to the funds previously paid into the escrow account have been extinguished in accordance with the settlement agreement.

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

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

This action, captioned Timber Hill LLC, v.

Valeant Pharmaceuticals International, Inc., et al., (Case No.

18-cv-10246), asserts securities fraud claims under Sections 10(b) and 20(a) of the Exchange Act on behalf of a putative class of persons who purchased call options or sold put options on the Company’s common stock during the period January 4, 2013 through August 11, 2016.

On June 11, 2018, this action was consolidated with In re Valeant Pharmaceuticals International, Inc.

Securities Litigation, (Case No.

15-cv-07658).

On January 14, 2019, the defendants filed a motion to dismiss the Timber Hill complaint.

Briefing on that motion was completed on February 13, 2019.

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

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

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BlueMountain Foinaven Master Fund, L.P.

Valeant Pharmaceuticals International, Inc.

Pharmaceuticals International, Inc.

16-cv-7328) (“BlueMountain”);

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VALIC Company I v.

Valeant Pharmaceuticals International,

Valeant Pharmaceuticals International, Inc.

Janus Aspen Series v.

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

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

These individual shareholder actions assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Certain of these individual actions assert additional claims, including claims under Section 18 of the Exchange Act, Sections 11, 12(a)(2) and 15 of the Securities Act, common law fraud, negligent misrepresentation and claims under the New Jersey Racketeer Influenced and Corrupt Organizations Act.

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Motions for summary judgment were filed on August 1, 2022.

On May 22, 2023, the Special Master overseeing the opt-out litigation issued reports and recommendations on all pending summary judgment motions.

The Special Master recommended denying Plaintiffs’ motions in their entirety, denying all motions filed by the Company and granting in part certain other defendants’ motions for summary judgment on subparts of their defenses.

On June 26, 2023, the Parties filed motions to adopt and objections to the Special Master’s May 22, 2023 reports and recommendations.

On January 2, 2024, the District Court issued decisions affirming in part and overruling in part the

Special Master’s recommendations and granting partial summary judgment in favor of defendants on additional subparts of their defenses.

On January 16, 2024, Plaintiffs filed a motion requesting that the Court reconsider a portion of its January 2, 2024 decisions.

No defendants have been fully dismissed from the opt-out actions as a result of the District Court’s decisions.

Trial dates have not been set in any of the opt-out actions.

The Company disputes the claims against it in the remaining individual opt-out complaints and intends to defend itself vigorously.

Securities Litigation – Kelk Complaint

On July 26, 2023, a purported class action complaint captioned Kelk v.

Bausch Health Companies Inc., et al.

23-cv-03996), was filed in the U.S.

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

The action alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

Plaintiffs allege that defendants made various misrepresentations and omissions regarding the Company’s proposed spin-off of Bausch + Lomb, and allege that those purported misrepresentations and omissions concealed that the spin-off was executed as part of a strategy to subvert the pending opt-out lawsuits and leave plaintiffs in those actions without viable means to a potential recovery.

An amended complaint was filed on January 19, 2024.

The amended complaint also alleges that defendants made various misrepresentations and omissions regarding the strength of the Company’s patents protecting its product, Xifaxan ® , from generic competitors.

Pursuant to the operative scheduling order, defendants will move to dismiss the amended complaint by March 20, 2024.

The Company disputes the claims against it and intends to defend itself vigorously.

Derivative Lawsuit – Powers Complaint

On October 2, 2023, a derivative lawsuit captioned Powers v.

Papa, et al .

159699/2023) was filed in the Supreme Court of the State of New York, County of New York by an alleged stockholder of the Company.

The action purports to assert derivative claims on behalf of the Company against the Company’s Board of Directors and certain of its current or former officers and directors.

The action asserts claims for, inter alia, breach of fiduciary duty and waste of corporate assets and alleges that the defendants breached their fiduciary duties of loyalty and good faith by causing the Company to issue false and/or misleading statements regarding the Company’s proposed spin-off of Bausch + Lomb.

On January 23, 2024, the Court entered a stipulation and order staying this action until the resolution of the forthcoming motion to dismiss in the Kelk action referenced above.

Canadian Securities Litigation

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On October 26, 2017, the plaintiffs issued their Judicial Application Originating Class Proceedings.

After a hearing on November 11, 2019, the court approved a settlement in the Catucci action between the class members and the Company’s auditors and the action was dismissed as against them.

After a hearing on November 11, 2019, the court approved a settlement in the Catucci action between the class members and the Company’s auditors and the action was dismissed as against the Company’s auditors.

On August 4, 2020, the Company entered into a settlement agreement with the plaintiffs in Catucci, on behalf of the class, pursuant to which it agreed to resolve the Catucci action for the amount of CAD 94,000,000 plus payment of an additional amount to cover notice and settlement administration costs and disbursements.

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In each case, the Company intends to defend itself vigorously.

RICO Class Actions

Between May 27, 2016 and September 16, 2016, three actions were filed in the U.S.

District Court for the District of New Jersey against the Company and various third-parties (these actions were subsequently consolidated), alleging claims under the federal Racketeer Influenced Corrupt Organizations Act (“RICO”) on behalf of a putative class of certain third-party payors that paid claims submitted by Philidor for certain Company-branded drugs between January 2, 2013 and November 9, 2015.

The consolidated complaint alleges, among other things, that the defendants committed predicate acts of mail and wire fraud by submitting or causing to be submitted prescription reimbursement requests that misstated or omitted facts regarding:

(1) the identity and licensing status of the dispensing pharmacy;

(2) the resubmission of previously denied claims;

(3) patient co-pay waivers;

(4) the availability of generic alternatives;

and (5) the insured’s consent to renew the prescription.

The complaint further alleges that these acts constitute a pattern of racketeering or a racketeering conspiracy in violation of the RICO statute and caused plaintiffs and the putative class unspecified damages, which may be trebled under the RICO statute.

On August 4, 2021, the Company executed a stipulation of settlement for this action and, on August 17, 2021, the Court preliminarily approved the settlement.

On December 6, 2021 the Special Master overseeing this litigation issued a report and recommendation recommending final approval of the settlement, and on February 22, 2022 the settlement was approved by the district court.

The time to appeal the district court’s final approval order expired on March 24, 2022, and the settlement has resolved and discharged all claims against the Company in this action.

Other Securities and RICO Related Matters

Insurance Coverage Lawsuit

On December 7, 2017, the Company filed a lawsuit against its insurance companies that issued insurance policies covering claims made against the Company, its subsidiaries, and its directors and officers during two distinct policy periods, (i) 2013-14 and (ii) 2015-16.

The lawsuit is currently pending in the United States District Court for the District of New Jersey (Valeant Pharmaceuticals International, Inc., et al.

The lawsuit was brought in the United States District Court for the District of New Jersey (Valeant Pharmaceuticals International, Inc., et al.

AIG Insurance Company of Canada, et al.;

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Pershing Square Capital Management, L.P., et al.

(the “Allergan Securities Litigation”) (under the 2013-2014 coverage period) and (ii) costs incurred and to be incurred in connection with the securities class actions and opt-out cases described in this section and the SEC Investigation and certain of the other investigations described under “Complete or Inactive Matters” in Note 20, “LEGAL PROCEEDINGS,” to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021 and under “Governmental and Regulatory Inquiries” and “Complete or Inactive Matters” in Note 21, “LEGAL PROCEEDINGS,” to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC and the CSA on February 19, 2020 (under the 2015-2016 coverage period).

Securities Litigation and the Canadian Securities Litigation and related opt-out litigation and related investigations matters described above.

On that same day, the Company entered into settlement agreements with two of its insurers in the 2013-2014 coverage period in which the Company agreed to resolve its claims against those two insurers only for insurance coverage in connection with the Allergan Securities Litigation.

As a result of all of the settlement agreements entered into with the insurers on July 20, 2021, the Company has received an aggregate sum of $ 213 million.

The Company’s insurance claims with respect to the Allergan Securities Litigation against the remaining insurers in the 2013-2014 coverage period remain pending.

(the “Allergan Securities Litigation”) (under the 2013-2014 coverage period) and (ii) costs incurred and to be incurred in connection with, inter alia , In re Valeant Pharmaceutical International, Inc.

Securities Litigation , the Securities Class Action Settlement, the U.S.

Securities Litigation – Opt-Out Litigation, and the Canadian Securities Litigation described in this section (collectively, “the Securities Matters”) (under the 2015-2016 coverage period).

On July 20, 2021, the Company entered into settlement agreements with the insurers in the 2015-2016 coverage period in which the Company agreed to resolve its claims for insurance coverage in connection with the Securities Matters, and with two insurers in the 2013-2014 coverage period to resolve its claims against those two insurers for insurance coverage in connection with the Allergan Securities Litigation.

As of June 30, 2023, the Company has entered into settlement agreements with the remaining insurers in the 2013-2014 coverage period in which the Company agreed to resolve its remaining claims for insurance coverage in connection with the Allergan Securities Litigation.

As a result of all of the settlement agreements entered into with the insurers through June 30, 2023, the Company has received an aggregate sum of $ 313 million for its claims in the 2013-2014 and 2015-2016 coverage periods.

This matter has now concluded.

Hound Partners Lawsuit

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The deadline to appeal the final approval of the class settlement has now passed, and the settlements have resolved and discharged all asserted class and direct purchaser non-class claims against the Company in the In re Glumetza Antitrust Litigation .

Glumetza State-Law Insurer Litigations

On February 8, 2021, the insurer plaintiff from the federal In re Glumetza Antitrust Litigation, Case No.

3:19-cv-05822- WHA (N.D.

Cal.) (the “In re Glumetza Antitrust Litigation”) (discussed in further detail above), Humana Inc.

filed an action asserting its indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others (the “State Court Action”).

The State Court Action alleges that a 2012 settlement of a patent litigation regarding Glumetza ® delayed generic entry in exchange for an agreement not to launch an authorized generic of Glumetza ® or grant any other company a license to do so.

The State Court Action alleges that the settlement agreement resulted in higher prices for Glumetza ® and its generic equivalent both prior to and after generic entry.

On September 20, 2021, the parties stipulated that Humana’s direct opt-out claims from In re Glumetza Antitrust Litigation, discussed above, were deemed asserted in the State Court Action.

Defendants’ demurrer in the State Court Action was heard on September 22, 2021.

On November 29, 2021, the court denied the motion in part and granted it in part as to certain state law claims, with leave to amend.

Humana did not amend the complaint.

Defendants’ answers were filed on February 3, 2022.

On April 5, 2022, Health Care Service Corporation filed an action with similar substantive allegations and similar indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others.

Defendants’ answers were filed on June 17, 2022.

On November 28, 2022, the Court consolidated this action with the State Court Action for trial and pretrial purposes (the “Consolidated State Case”).

Trial is currently scheduled to start in December 2024 in the Consolidated State Case.

The Company disputes the claims and intends to vigorously defend these matters.

Generic Pricing Antitrust Litigation

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The lawsuits seek damages under federal and state antitrust laws, state consumer protection and unjust enrichment laws and allege that the Company’s subsidiaries entered into a conspiracy to fix, stabilize, and raise prices, rig bids and engage in market and customer allocation for generic pharmaceuticals.

The lawsuits, which have been brought as putative class actions by direct purchasers, end payers, and indirect resellers, and as direct actions by direct purchasers, end payers, insurers, States, and various Counties, Cities, and Towns, have been consolidated into the MDL.

The lawsuits, which have been brought as putative class actions by direct purchasers, end payers, and indirect resellers, and as direct actions by direct purchasers, end payers, insurers, hospitals, pharmacies, States, and various Counties, Cities, and Towns, have been consolidated into the MDL.

There are also additional, separate complaints which have been consolidated in the same MDL that do not name the Company or any of its subsidiaries as a defendant.

There are cases pending in the Court of Common Pleas of Philadelphia County against the Company and other defendants related to the multidistrict litigation, but no complaint has been filed in the cases.

On January 31, 2024, the United States Judicial Panel on Multidistrict Litigation entered a Remand Order remanding to the District of Connecticut, among other cases, State of Connecticut, et al.

Sandoz, Inc., et al., C.A.

2:20-03539 (D.

3:20-00802), in which the Company is a defendant.

The cases have been placed in deferred status.

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in the Federal Court in Toronto, Ontario, Canada (Court File No.

plaintiff seeks to certify a proposed class action on behalf of persons in Canada who purchased generic drugs in the private sector, alleging that the Company and other defendants violated the Competition Act by conspiring to allocate the market, fix prices, and maintain the supply of generic drugs, and seeking damages under federal law.

The plaintiff seeks to certify a proposed class action on behalf of persons in Canada who purchased generic drugs in the private sector, alleging that the Company and other defendants violated the Competition Act by conspiring to allocate the market, fix prices, and maintain the supply of generic drugs, and seeking damages under federal law.

The proposed class action contains similar allegations to the In re:

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It is anticipated that Bausch + Lomb and the Company will split the fees and expenses associated with defending these claims, as well as any potential damages or other liabilities awarded in or otherwise arising from these claims, in the manner set forth in the Master Separation Agreement between Bausch Health and Bausch + Lomb.

Glumetza State-Law Insurer Litigations

On February 8, 2021, the insurer plaintiff from the federal In re Glumetza Antitrust Litigation , Case No.

3:19-cv-05822- WHA (N.D.

Cal.) (the “ In re Glumetza Antitrust Litigation ”) (discussed in further detail above), Humana Inc.

(“Humana”), filed an action asserting its indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others (the “State Court Action”).

The State Court Action alleges that the settlement agreement resulted in higher prices for Glumetza ® and its generic equivalent both prior to and after generic entry.

On September 20, 2021, the parties stipulated that Humana’s direct opt-out claims from In re Glumetza Antitrust Litigation , discussed above, were deemed asserted in the State Court Action.

Defendants’ demurrer in the State Court Action was heard on September 22, 2021.

On November 29, 2021, the court denied the motion in part and granted it in part as to certain state law claims, with leave to amend.

Humana did not amend the complaint.

Defendants’ answers were filed on February 3, 2022.

Defendants’ answers were filed on June 17, 2022.

On November 28, 2022, the Court consolidated this action with the State Court Action for trial and pretrial purposes (the “Consolidated State Case”).

Trial is currently scheduled to start in January 2024 in the Consolidated State Case.

The Company disputes the claims and intends to vigorously defend these matters.

Intellectual Property

Patent Litigation/Paragraph IV Matters

From time to time, the Company (and/or certain of its affiliates) is also party to certain intellectual property litigation proceedings in the United States and Canada, including as arising from claims filed against the Company or by the Company (or that the Company anticipates filing within the required time periods) related to certain products sold by or on behalf of the Company, which may be in connection with Notices of Paragraph IV Certification (in the United States) and Notices of Allegation (in Canada) received from third-party generic manufacturers, where such products include Xifaxan ® 200 mg and 550 mg, Arazlo ® , Colazal ® , Duobrii ® , Lumify ® , Nuvessa ® and Trulance ® in the United States and Jublia ® in Canada.

behalf of the Company, which may be in connection with Notices of Paragraph IV Certification (in the United States) and Notices of Allegation (in Canada) received from third-party generic manufacturers, where such products include Xifaxan ® 200 mg and 550 mg, Arazlo ® , Duobrii ® , Lotemax ® SM, Lumify ® , Trulance ® and Vyzulta ® in the United States.

Xifaxan ® Paragraph IV Proceedings

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(“Norwich”), in which Norwich asserted that the U.S.

patents listed in the FDA’s Orange Book for the Company’s Xifaxan ® tablets, 550 mg, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Norwich’s generic rifaximin tablets, 550 mg, for which an Abbreviated New Drug Application (“ANDA”) has been filed by Norwich.

The Company, through its subsidiaries Salix Pharmaceuticals, Inc.

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Trial in this matter was held in March 2022.

The court issued a final judgment on August

10, 2022, (the “Norwich Legal Decision”), finding that the U.S.

The court issued a final judgment on August 10, 2022, (the “Norwich Legal Decision”), finding that the U.S.

Patents protecting the use of Xifaxan ® (rifaximin) 550 mg tablets for the reduction in risk of hepatic encephalopathy (“HE”) recurrence valid and infringed and the U.S.

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Following the Company’s appeal, Norwich claimed to have removed the HE indication from its existing ANDA and then filed a motion in the District Court requesting modification of the Norwich Legal Decision to permit the FDA to approve their ANDA before October 2029.

The Company opposed this motion and awaits a decision on the motion from the District Court.

The Company opposed the motion.

On May 17, 2023, the District Court denied Norwich’s motion and confirmed that the FDA remained enjoined from granting final approval to Norwich’s ANDA until October 2029.

Norwich filed its appeal to the U.S.

Court of Appeals for the Federal Circuit on May 19, 2023.

The Company’s and Norwich’s appeals are now consolidated (the “Norwich Appeal”).

The Norwich Appeal has been fully briefed and the Federal Circuit heard oral arguments on January 8, 2024.

The Company awaits a decision from the Federal Circuit.

In a letter to Norwich on June 2, 2023, the FDA granted tentative approval to Norwich’s ANDA, but confirmed that it is enjoined from granting final approval until October 2029.

On June 5, 2023, Norwich brought a lawsuit against the FDA in the U.S.

District Court for the District of Columbia (the “DC District Court”), alleging that the FDA acted improperly by only granting tentative approval to Norwich’s ANDA rather than final approval (the “Norwich DC Lawsuit”).

In June 2023, the Company intervened in the Norwich DC Lawsuit.

A hearing was held on October 6, 2023.

On November 1, 2023, the DC District Court granted the Company’s and FDA’s motions for summary judgment, thereby ending the lawsuit.

In December 2023, Norwich appealed the DC District Court’s November 1st decision to the U.S.

Court of Appeals for the District of Columbia Circuit.

In December 2023, Norwich appealed the DC District Court’s November 1st decision to the U.S.

Court of Appeals for the District of Columbia Circuit (the “DC Circuit”).

On February 2, 2024, the DC Circuit decided to hold the appeal in abeyance pending a decision from the Federal Circuit in the Norwich Appeal.

In January 2023 and October 2023, the U.S.

Patent Office issued U.S.

11,564,912 (the “’912 Patent”) and 11,779,571 (the “’571 Patent”) directed to IBS-D, which were then listed in the FDA’s Orange Book for Xifaxan ® .

The Company received new Notices of Paragraph IV Certification from Norwich asserting that claims of the ‘912 and ‘571 Patents are invalid, unenforceable, and/or will not be infringed by the commercial manufacture, use, or sale of Norwich’s generic rifaximin tablets, 550 mg, under the existing Norwich ANDA.

Any suit brought against the existing Norwich ANDA under the ‘912 or ‘571 Patent is not believed to result in a new 30 -month stay of approval.

The Company remains confident in the strength of the Xifaxan ® patents and intends to vigorously defend its intellectual property.

Duobrii ® Paragraph IV Proceedings

On July 23, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd.

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

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

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

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

Following a three-day trial in October 2022, on December 1, 2022, the District Court issued a final decision in favor of Bausch, finding the Bryhali ® and Duobrii ® patents valid and infringed by Padagis.

The District Court dismissed the lawsuit on February 3, 2023.

In June 2022, the Company received a Notice of Paragraph IV Certification from Taro Pharmaceuticals Inc.

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The Company remains confident in the strength of the Duobrii ® patents and intends to vigorously defend its intellectual property.

Bryhali ® Paragraph IV Proceedings

On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Padagis, in which Padagis asserted that certain U.S.

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

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

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

The District Court dismissed the lawsuit on February 3, 2023.

Trulance ® Paragraph IV Proceedings

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

patent listed in the

FDA’s Orange Book for the Company’s Trulance ® tablets, 3 mg, were invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of Auro’s generic plecanatide tablets, 3 mg.

patent listed in the FDA’s Orange Book for the Company’s Trulance ® tablets, 3 mg, were invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of Auro’s generic plecanatide tablets, 3 mg.

The filing of this suit triggered a 30 -month stay of the approval of the Auro ANDA for plecanatide tablets.

On October 30, 2023, the litigation with Auro was dismissed in accordance with a settlement between the Company and Auro.

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

Xifaxan ® Litigation with Curia IP Holdings, LLC

Curia IP Holdings, LLC (“Curia”) filed a lawsuit against the Company on October 25, 2021, alleging that Xifaxan ® 200 mg and 550 mg tablets infringe certain patents owned by Curia (U.S.

10,745,415, and 10,961,257 (the “Curia Patents”)).

Each of the Curia Patents was filed years after the Company’s launches of Xifaxan ® 200 mg and 550 mg tablets.

On August 17, 2022, the U.S.

District Court for the District of New Jersey dismissed the complaint, without prejudice.

Curia then filed an amended complaint on September 16, 2022, realleging infringement of its patents.

On August 31, 2023, Curia filed a second lawsuit against the Company alleging that Xifaxan ® 200 mg and 550 mg tablets infringe U.S.

11,739,099 (the “’099 Patent”).

The ‘099 Patent is related to the Curia Patents and was also filed years after the Company’s launches of Xifaxan 200 mg and 550 mg tablets.

The first and second lawsuits filed by Curia are now consolidated (the “Curia Lawsuits”).

On February 14, 2024, the court issued an order administratively terminating the case pending completion of mediation on or before April 14, 2024.

The Company disputes Curia’s infringement claims against Xifaxan ® 200 mg and 550 mg tablets and will continue to defend this matter.

PreserVision ® AREDS Patent Litigation

PreserVision ® AREDS and PreserVision ® AREDS 2 are over the counter eye vitamin formulas for those with moderate-to-advanced age-related degeneration (“AMD”).

PreserVision ® AREDS and PreserVision ® AREDS 2 are OTC eye vitamin formulas for those with moderate-to-advanced AMD.

The PreserVision ® U.S.

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Bausch & Lomb Incorporated (“B&L Inc.”) has filed patent infringement proceedings against 19 named defendants in 16 proceedings claiming infringement of these patents and, in certain circumstances, related unfair competition and false advertising causes of action.

Twelve of these proceedings were subsequently settled;

Thirteen of these proceedings were subsequently settled;

two resulted in a default.

As of the date of this filing, there are two ongoing actions:

As of the date of this filing, there is one ongoing action:

Bausch & Lomb Inc.

& PF Consumer Healthcare 1 LLC v.

ZeaVision LLC, C.A.

6:20-cv-06452-CJS (W.D.N.Y.);

and (2) Bausch & Lomb Inc.

& PF Consumer Healthcare 1 LLC v.

SBH Holdings LLC, C.A.

20-cv-01463-VAC-CJB (D.

20-cv-01463-GBW-CJB (D.

Bausch + Lomb remains confident in the strength of these patents and B&L Inc.

intends to continue to vigorously pursue these matters and defend its intellectual property.

Patent Litigation against Certain Ocuvite and PreserVision

On June 22, 2021, ZeaVision, LLC (“ZeaVision”) filed a complaint for patent infringement against certain of the Ocuvite ® and PreserVision ® products in the Eastern District of Missouri (Case No.

4:21-cv-00739-RWS).

On June 29, 2021, ZeaVision amended its complaint to assert a second patent against certain of the Ocuvite ® and PreserVision ® products.

On November 16, 2021, ZeaVision filed an additional complaint for patent infringement to assert a third patent against certain of the PreserVision ® products (Case No.

4:21-cv-01352-RWS).

On March 1, 2022, the cases were consolidated.

On March 10, 2022, the court granted Bausch + Lomb’s motion to stay all proceedings pending inter partes review.

On July 1, 2022, ZeaVision filed a motion to partially lift the stay to allow Case No.

4:21-cv-01352-RWS to proceed, and this motion was denied.

The Company disputes the claims and intends to vigorously defend this matter.

will continue to vigorously pursue this matter and defend its intellectual property.

Lumify ® Paragraph IV Proceedings

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On September 10, 2021, B&L Inc., Bausch + Lomb Ireland Limited and Eye Therapies filed suit against Slayback pursuant to the Hatch-Waxman Act, alleging infringement by Slayback of one or more claims of the Lumify Patents, thereby triggering a 30 -month stay of the approval of the Slayback ANDA.

On January 20, 2022, B&L Inc.

received a Notice of Paragraph IV Certification from Lupin Ltd.

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

patents, each of which is listed in the FDA’s Orange Book for Lumify ® (brimonidine tartrate solution) drops (the “Lumify Patents”), are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Lupin’s generic brimonidine tartrate solution, for which its ANDA No.

216716 has been filed by Lupin.

On February 2, 2022, B&L Inc., Bausch + Lomb Ireland Limited and Eye Therapies filed suit against Lupin pursuant to the Hatch-Waxman Act, alleging patent infringement by Lupin of one or more claims of the Lumify Patents, thereby triggering a 30 -month stay of the approval of the Lupin ANDA.

remains confident in the strength of the Lumify ® related patents and B&L Inc.

intends to vigorously defend its intellectual property.

Since then, U.S.

9,259,425 has been dismissed from the case.

On May 15, 2023, the United States Patent & Trademark Office’s Patent Trial and Appeal Board issued a Final Written Decision, finding all claims of U.S.

8,293,742 unpatentable.

This decision has been appealed to the United States Court of Appeals for the Federal Circuit and the appeal is ongoing.

Furthermore, two additional patents (US.

11,596,600 and 11,833,245) have issued and been listed in the Orange Book as related to Lumify ® .

Lawsuits alleging infringement of these patents were filed against Slayback and its licensee, Dr.

Reddy’s Laboratories S.A.

Reddy’s Laboratories, Inc.

(collectively, “DRL”).

Subsequently, on December 15, 2023, B&L Inc., Bausch + Lomb Ireland Limited, and Eye Therapies filed a Motion for a Preliminary Injunction requesting the court to enjoin any infringing activities by DRL.

Additionally, on December 18, 2023, B&L Inc., Bausch + Lomb Ireland Limited, and Eye Therapies amended its complaint to add claims for copyright infringement, as well as claims under the Lanham Act, including trademark and trade dress infringement.

The lawsuit against DRL is ongoing in the District of New Jersey, with no trial date set.

Bausch + Lomb remains confident in the strength of the Lumify ® related patents and intends to vigorously defend its intellectual property.

In addition to the intellectual property matters described above, in connection with the Vyzulta ® and Lotemax ® SM products, the Company has commenced ongoing infringement proceedings against a potential generic competitor in the U.S.

Inter Partes Review Proceedings at the U.S.

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IPR challenges have been brought against patents covering the Company’s branded pharmaceutical products.

Following Acrux DDS’s IPR petition, the U.S.

Patent and Trial Appeal Board (“PTAB”), in May 2017, instituted inter partes review for an Orange Book-listed patent covering Jublia ® (U.S.

7,214,506 (the “‘506 Patent”)) and, on

June 6, 2018, issued a written determination invalidating such patent.

An appeal of this decision was filed on August 7, 2018.

On March 13, 2020, the Court of Appeals for the Federal Circuit reversed this decision and remanded the matter back to the PTAB for further proceedings.

As a result of a settlement, a joint motion to terminate the proceedings was filed on November 12, 2020 and, on January 8, 2021, the PTAB granted this motion.

The ‘506 Patent, therefore, remains valid and enforceable and expires in 2026.

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

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

All cases in the U.S.

regarding Jublia ® have been settled.

Three lawsuits are pending in Canada regarding Jublia ® against Apotex Inc.

and Pharmascience Inc.

Mylan and MSN have filed IPR petitions for certain U.S.

patents listed in the FDA Orange Book for Trulance ® (plecanatide).

patents listed in the FDA’s Orange Book for Trulance ® (plecanatide).

On March 21, 2022, Mylan filed a petition for IPR of U.S.

On October 12, 2022, MSN also filed a petition for IPR of U.S.

7,041,786 and the PTAB then issued a decision on December 14, 2022, instituting MSN’s IPR and joining it with Mylan’s IPR.

On June 10, 2022, Mylan filed petitions for IPR of U.S.

9,610,321, 9,616,097, 9,919,024 and 9,925,231.

In the Company’s favor, the PTAB issued decisions on Jan.

4, 2022, denying Mylan’s petitions.

7,041,786 (the “’786 Patent”), which was then instituted on September 14, 2022.

On October 12, 2022, MSN also filed a petition for IPR of the ’786 Patent and the PTAB then issued a decision on December 14, 2022, instituting MSN’s IPR and joining it with Mylan’s IPR.

On September 8, 2023, the PTAB issued as decision finding that Mylan and MSN had not shown that the ’786 Patent is unpatentable.

On September 28, 2023, Mylan appealed the PTAB’s September 8th decision to the U.S.

Court of Appeals for the Federal Circuit.

On June 21, 2023, Padagis filed an IPR petition against U.S.

11,311,482 (the “’482 Patent”), which is Orange Book-listed for Arazlo ® .

In a decision dated January 12, 2024, the PTAB denied institution of an IPR against the ‘482 Patent.

The Company remains confident in the strength of these patents and intends to vigorously defend its intellectual property.

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Since 2016, the Company has been named in a number of product liability lawsuits involving the Shower to Shower ® body powder product acquired in September 2012 from Johnson & Johnson;

due to dismissals, twenty-six ( 26 ) of such product liability suits currently remain pending.

due to dismissals, twenty-seven ( 27 ) of such product liability suits currently remain pending.

In three ( 3 ) cases pending in the Atlantic County, New Jersey Multi-County Litigation, agreed stipulations of dismissal have been entered by the Court, thus dismissing the Company from those cases.

Potential liability (including its attorneys’ fees and costs) arising out of these remaining suits is subject to full indemnification obligations of Johnson & Johnson owed to the Company and its affiliates, and legal fees and costs will be paid by Johnson & Johnson.

Twenty-five ( 25 ) of these lawsuits filed by individual plaintiffs allege that the use of Shower to Shower ® caused the plaintiffs to develop ovarian cancer, mesothelioma or breast cancer.

Twenty-six ( 26 ) of these lawsuits filed by individual plaintiffs allege that the use of Shower to Shower ® caused the plaintiffs to develop ovarian cancer, mesothelioma or breast cancer.

The allegations in these cases include failure to warn, design defect, manufacturing defect, negligence, gross negligence, breach of express and implied warranties, civil conspiracy concert in action, negligent misrepresentation, wrongful death, loss of consortium and/or punitive damages.

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Plaintiffs also seek pre- and post-judgment interest, exemplary and punitive damages, and attorneys’ fees.

Additionally, two proposed class actions have been filed in Canada against the Company and various Johnson & Johnson entities ( one in the Supreme Court of British Columbia and one in the Superior Court of Quebec), on behalf of persons who have purchased or used Johnson & Johnson’s Baby Powder or Shower to Shower ® .

The class actions allege the use of the product increases certain health risks (British Columbia) or negligence in failing to properly test, failing to warn of health risks, and failing to remove the products from the market in a timely manner (Quebec).

Additionally, two proposed class actions were filed in Canada against the Company and various Johnson & Johnson entities ( one in the Supreme Court of British Columbia and one in the Superior Court of Quebec), on behalf of persons who have purchased or used Johnson & Johnson’s Baby Powder or Shower to Shower ® .

The class actions allege the use of the product increases certain health risks (British Columbia) or negligence in failing to

properly test, failing to warn of health risks, and failing to remove the products from the market in a timely manner (Quebec).

The plaintiffs in these actions are seeking awards of general, special, compensatory and punitive damages.

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as a result, the British Columbia class action is concluded as to the Company.

Johnson & Johnson, through one or more subsidiaries, has purported to have completed a Texas divisional merger with respect to any talc liabilities at Johnson & Johnson Consumer, Inc.

Pursuant to court orders entered in November 2021, the case was transferred to the United States District Court for the District of New Jersey (the “Bankruptcy Court”), and substantially all cases related to Johnson & Johnson’s talc liability were stayed for a period of sixty ( 60 ) days pursuant to a preliminary injunction.

Notwithstanding the divisional merger and LTL’s bankruptcy case, the Company and its affiliates continue to have indemnification claims and rights against Johnson & Johnson and LTL pursuant to the terms of the indemnification agreement entered into between JJCI and its affiliates and the Company and its affiliates, which indemnification agreement remains in effect.

In October 2021, Johnson & Johnson, through one or more subsidiaries, purported to complete a Texas divisional merger with respect to any talc liabilities at Johnson & Johnson Consumer, Inc.

LTL Management, LLC (“LTL”), the resulting entity of the divisional merger, assumed JJCI’s talc liabilities and thereafter filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Western District of North Carolina, which in November 2021 was transferred to the United States District Court for the District of New Jersey (the “Bankruptcy Court”).

The first bankruptcy case was dismissed on April 4, 2023, after a decision by the Third Circuit Court of Appeals, and LTL re-filed a new chapter 11 case in the Bankruptcy Court on the same day.

Several motions to dismiss were again filed, and on August 11, 2023, the Bankruptcy Court dismissed the second chapter 11 case.

On August 24, 2023, LTL and certain supporting creditors and tort claimants filed notices of appeal of the dismissal order.

On October 20, 2023, the Third Circuit accepted the appeal, which remains pending.

During the pendency of LTL’s bankruptcy cases, the Bankruptcy Court extended a preliminary injunction that had stayed substantially all cases subject to the indemnification agreement related to Johnson & Johnson’s talc liability, which injunction was terminated in connection with the bankruptcy case dismissal.

After the dismissal of the Chapter 11 case, the Company’s and Bausch + Lomb’s position vis a vis Johnson & Johnson returned to the status quo prior to the filing.

The litigation against the Company, Bausch + Lomb and other defendants is no longer stayed, and LTL and Johnson & Johnson continues to have indemnification obligations running to the Company and its affiliates, including Bausch + Lomb, for Shower to Shower ® related product liability litigation.

Notwithstanding the divisional merger and LTL’s bankruptcy cases, the Company and its affiliates continue to have indemnification claims and rights against Johnson & Johnson and LTL pursuant to the terms of the indemnification agreement entered into between JJCI and its affiliates and the Company and its affiliates, which indemnification agreement remains in effect.

As a result, it is the Company’s current expectation that it will not incur any material impairments with respect to its indemnification claims as a result of the divisional merger or the bankruptcy.

In December 2021, certain talc claimants filed motions to dismiss the bankruptcy case.

Shortly thereafter, LTL

filed a motion in the Bankruptcy Court to extend the 60 -day preliminary injunction.

On February 25, 2022, the Bankruptcy Court entered orders denying the motions to dismiss and extending the preliminary injunction staying substantially all cases subject to the indemnification agreement related to Johnson & Johnson’s talc liability through at least June 29, 2022, which it later extended indefinitely.

The order denying the motions to dismiss and the order extending the preliminary injunction were subject to appeal and the Bankruptcy Court certified their appeals directly to the United States Court of Appeals for the Third Circuit.

On May 11, 2022, the Third Circuit granted authorization for the parties to proceed with their direct appeals.

Oral argument before the Third Circuit was held on September 19, 2022.

On January 30, 2023, a unanimous three-judge Third Circuit Court of Appeals panel issued its decision directing the Bankruptcy Court to dismiss LTL’s bankruptcy case, concluding that LTL was not in financial distress and could not file a bankruptcy case in good faith.

LTL has filed a petition for rehearing en banc from the Third Circuit.

If the bankruptcy case is ultimately dismissed, the Company’s position vis a vis J&J would return to the status quo prior to the filing.

The litigation against the Company and other defendants will no longer be stayed, and LTL and J&J will continue to have indemnification obligations running to the Company and its affiliates for Shower-to-Shower related product liability litigation.

During the pendency of the appeal, the Bankruptcy Court was considering competing motions by Debtor LTL to extend its exclusive period to file a chapter 11 plan and the talc claimants to terminate LTL’s exclusivity.

In light of the Third Circuit’s decision, on January 31, 2023, the Bankruptcy Court adjourned any hearing on the exclusivity motions to March 20, 2023.

To the extent that any cases proceed during the pendency of the bankruptcy case, or if the case is ultimately dismissed, it is the Company’s expectation that Johnson & Johnson, in accordance with the indemnification agreement, will continue to vigorously defend the Company in each of the remaining actions.

General Civil Actions

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This action seeks a declaratory judgment that alleged transfers of certain Company assets to Bausch + Lomb would constitute a voidable transfer under the New Jersey Voidable Transactions Act and that Bausch + Lomb would be liable for damages, if any, awarded against the Company in the individual opt-out actions.

The declaratory judgment action alleges that the future potential separation of Bausch + Lomb from the Company by distribution of Bausch + Lomb stock to the Company’s shareholders would leave the Company with inadequate financial resources to satisfy these plaintiffs’ alleged securities fraud damages in the underlying individual opt-out actions.

The declaratory judgment action also alleges that the potential future separation of Bausch + Lomb from the Company by distribution of Bausch + Lomb stock to the Company’s shareholders would leave the Company with inadequate financial resources to satisfy these plaintiffs’ alleged securities fraud damages in the underlying individual opt-out actions.

None of the plaintiffs in this declaratory judgment action have obtained a judgment against the Company in the underlying individual opt-out actions and the Company disputes the claims against it in those underlying actions.

The underlying individual opt-out actions assert claims under Sections 10(b) and 20(a) of the Exchange Act, and certain actions assert claims under Section 18 of the Exchange Act.

The underlying individual opt-out actions assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and certain actions assert claims under Section 18 of the Exchange Act.

The allegations in those underlying individual opt out actions are made against the Company and several of its former officers and directors only and relate to, among other things, allegedly false and misleading statements made during the 2013-2016 time period by the Company and/or failures to disclose information about the Company’s business and prospects including relating to drug pricing and the use of specialty pharmacies.

On March 31, 2022, the Company and Bausch + Lomb removed the action to the U.S.

On March 31, 2022, the Company and Bausch + Lomb removed the declaratory judgment action to the U.S.

District Court for the District of New Jersey.

On April 29, 2022, Plaintiffs filed a motion to remand.

On November 29, 2022, the District Court granted Plaintiffs’ remand motion and the case was remanded to the Superior Court.

On November 29, 2022, the District Court granted Plaintiffs’ remand motion and the case was remanded to the New Jersey Superior Court Chancery Division.

On December 8, 2022, Plaintiffs filed a proposed Order to Show Cause and motion for a preliminary injunction, and sought interim relief including expedited discovery.

On December 13, 2022, the Court denied Plaintiffs’ proposed Order to Show Cause and stayed discovery pending the resolution of the Company and Bausch + Lomb’s forthcoming motions to dismiss, while instructing the Company to provide certain notice to Plaintiffs of the intended completion of the distribution referenced above under certain circumstances.

On December 22, 2022, Plaintiffs filed an amended complaint.

On January 11, 2023, the Company and Bausch + Lomb moved to dismiss the amended complaint.

That motion is pending.

On December 13, 2022, the Court denied Plaintiffs’ proposed Order to Show Cause and stayed discovery pending the resolution of the Company and Bausch + Lomb’s forthcoming motions to dismiss, while instructing the Company to provide certain notice to Plaintiffs of the intended completion of a potential future distribution referenced above under certain circumstances.

On December 22, 2022, Plaintiffs filed an amended complaint which, among other things, added claims seeking injunctive relief.

On January 11, 2023, the Company and Bausch + Lomb moved to dismiss the amended

Briefing was complete on February 24, 2023, and the motion to dismiss was heard on March 3, 2023.

On April 3, 2023, the Court issued a decision granting in part and denying in part the motion to dismiss.

Both the Company and Bausch + Lomb dispute the claims in this declaratory judgment action and intend to vigorously defend this matter.

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Johnson & Johnson, et al., Case No.

37-2019-00025810-CU-NP-CTL), asserting claims for purported violations of the California Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law in connection with their sale of talcum powder products that the plaintiffs allege violated Proposition 65 and/or the

California Safe Cosmetics Act.

This lawsuit was served on Bausch Health US in June 2019 and was subsequently removed to the United States District Court for the Southern District of California, where it is currently pending.

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On February 17, 2023, Johnson & Johnson requested the court afford it sixty ( 60 ) days – until April 18, 2023, or seven ( 7 ) days following any lifting of the LTL Bankruptcy Court’s preliminary injunction – whichever comes earliest – to provide an additional status report about the bankruptcy proceeding and the Third Circuit dismissal for which LTL has requested a rehearing.

The Company and Bausch Health US dispute the claims against them and intend to defend this lawsuit vigorously.

On April 7, 2023, Johnson & Johnson Consumer Inc.

filed a status report regarding the bankruptcy proceeding advising the Court of the dismissal of the prior bankruptcy proceeding and the filing of the second bankruptcy proceeding, as well as the preliminary injunction and stay order, and requesting the stay of the appeal remain in place until May 10, 2023, which was granted.

Following the entry of a preliminary injunction applicable to this case, which was extended until August 26, 2023, the Ninth Circuit extended the stay to June 15, 2023.

On June 22, 2023, Johnson & Johnson/ LTL filed a status report requesting the stay be extended to August 26, 2023, consistent with the extension of the preliminary injunction by the bankruptcy court.

On August 15, 2023, Johnson & Johnson filed a supplemental status report notifying the Ninth Circuit that the second bankruptcy proceeding was dismissed on August 11, 2023, so the stay could be lifted and briefing could proceed to conclusion and setting of oral argument.

On September 13, 2023, the Ninth Circuit lifted the stay.

On January 28, 2024, the Ninth Circuit issued a notice of oral argument setting the argument for Monday, April 8, 2024.

Bausch Health US disputes the claims in this lawsuit and will defend it vigorously.

New Mexico Attorney General Consumer Protection Action

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On December 30, 2020 Johnson & Johnson filed a Motion for Partial Judgment on the Pleadings and on January 4, 2021, Bausch Health US filed a joinder to that motion, which was denied on March 8, 2021.

Trial is scheduled to begin on May 30, 2023.

Trial was scheduled to begin on May 30, 2023, until the case was stayed by an interlocutory appeal to the New Mexico Supreme Court by Johnson & Johnson.

On July 14, 2022, LTL filed an adversary proceeding in the Bankruptcy Court (Case No.

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22-01231) against the State of New Mexico ex rel.

Balderas, Attorney General, and a motion seeking an injunction barring the New Mexico Attorney General from continuing to prosecute the action while the bankruptcy case is pending.

A hearing was held on September 14, 2022, and on October 4, 2022, the Bankruptcy Court entered an order granting the injunction.

The New Mexico and Mississippi Attorneys General appealed the order granting the preliminary injunction and sought direct appeal to the Third Circuit.

The Bankruptcy Court certified the matter for direct appeal to the Third Circuit Court of Appeals.

The Company and Bausch Health US dispute the claims against them and intend to defend this lawsuit vigorously.

Other General Civil Actions

Balderas, Attorney General, and obtained an injunction from the Bankruptcy Court barring the New Mexico Attorney General from continuing to prosecute the action while the bankruptcy case was pending.

Because the Bankruptcy Court has ultimately dismissed both LTL’s first and second bankruptcy cases, this suit has returned to its status quo prior to LTL’s filing.

The Company and Bausch Health US dispute the claims against them, and this lawsuit will be defended vigorously.

California Consumer Protection Action

On October 31, 2023, Plaintiff County of Los Angeles filed an action on behalf of the state of California against the Company and Johnson & Johnson, seeking injunctive relief, restitution and damages in California state court (People of the State of California, by and through County of Los Angeles v.

Johnson & Johnson, et al., Case No.

23STCV27015).

The lawsuit asserts claims for purported violations of the California False Advertising Law, Unfair Competition Law, and public nuisance claims, against multiple manufacturers of talcum powder products, including Shower to Shower ® , that the plaintiffs allege caused or contributed to development of ovarian cancer and mesothelioma in residents of California.

The lawsuit seeks injunctive relief, restitution, statutory penalties and damages.

The Company and its affiliates dispute the claims against them, and this lawsuit will be defended vigorously.

Litigation with Former Salix CEO

On January 28, 2019, former Salix Pharmaceuticals, Ltd.

(“Salix Ltd.”) CEO and director Carolyn Logan filed a lawsuit in the Delaware Court of Chancery, asserting claims for breach of contract and declaratory relief.

On November 19, 2021, Logan amended her complaint to add a claim for breach of the implied covenant of good faith and fair dealing.

The lawsuit arose out of the contractual termination of approximately $ 30 million in unvested equity awards following the determination by the Salix Ltd.

Board of Directors that Logan intentionally engaged in wrongdoing that resulted, or would reasonably be expected to result, in material harm to Salix Ltd., or to the business or reputation of Salix Ltd.

Logan sought the restoration of the unvested equity awards and a declaration regarding certain rights related to indemnification.

On September 8, 2023, Salix Ltd.

and Bausch Health Americas reached an agreement in principle and, thereafter, executed, a final settlement agreement effective December 11, 2023, to resolve the matter, which includes no admission of wrongdoing or liability as to the claims asserted.

On December 14, 2023, the parties filed a stipulation dismissing the case, with prejudice.

Rifaximin Breach of Contract Litigation

On September 8, 2022, Lupin filed a lawsuit in the U.S.

District Court for the Southern District of New York against Salix Pharmaceuticals, Inc., and the Company, asserting breach of contract claims relating to a 2009 manufacturing and supply agreement between Lupin and Salix Pharmaceuticals, Inc.

concerning rifaximin.

On November 18, 2022, Lupin filed an Amended Complaint, which added Bausch Health US as a defendant.

On March 28, 2023, the Company was dismissed without prejudice.

On October 10, 2023, Salix Pharmaceuticals, Inc.

asserted counterclaims against Lupin for breach of contract.

No trial date has been set.

Salix Pharmaceuticals, Inc.

and Bausch Health US dispute Lupin’s claims, and intend to defend this matter vigorously.

Doctors Allergy Formula Lawsuit

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The Court held a hearing on the motion on January 25, 2022.

The motion remains pending.

Bausch Health Americas disputes the claims against it and intends to continue to defend itself vigorously.

Litigation with Former Salix CEO

On January 28, 2019, former Salix Ltd.

CEO and director Carolyn Logan filed a lawsuit in the Delaware Court of Chancery, asserting claims for breach of contract and declaratory relief.

On November 19, 2021, Logan amended her complaint to add a claim for breach of the implied covenant of good faith and fair dealing.

The lawsuit arises out of the contractual termination of approximately $ 30 million in unvested equity awards following the determination by the Salix Ltd.

Logan seeks the restoration of the unvested equity awards and a declaration regarding certain rights related to indemnification.

On June 20, 2019, the Court entered an order staying the claim for declaratory relief pending the final resolution of the breach of contract claim.

Trial is scheduled to commence on April 10, 2023.

The Company disputes the claims against it in each of these matters and intends to vigorously defend the matters.

On May 12, 2023, the Court issued a Decision and Order denying Bausch Health Americas’ motion.

On June 14, 2023, Bausch Health Americas filed a Notice of Appeal as to the Decision and Order.

Bausch Health Americas disputes the claims against it and this lawsuit will be defended vigorously.

Apriso ® Qui Tam Litigation

In 2018, a qui tam complaint, captioned United States ex rel.

Silbersher v.

Valeant Pharmaceuticals Int’l, Inc., et al.

4:18-cv-01496), was filed in the U.S.

District Court for the Northern District of California against the Company, certain of its subsidiaries (collectively, the “Company”), and a third party, claiming that their alleged misrepresentations before the U.S.

Patent Office ultimately resulted in false claims for payment being made to federal and state healthcare payors for

The complaint asserts claims seeking, inter alia , damages, civil penalties and attorneys’ fees under the federal False Claims Act and the false claims acts of several states.

In May 2020, the District Court granted defendants’ motion to dismiss, holding that Plaintiff-relator’s qui tam action was precluded by the False Claims Act’s public disclosure bar.

Plaintiff-relator appealed to the U.S.

Court of Appeals for the Ninth Circuit.

In August 2023, the Court of Appeals reversed the District Court’s order and remanded to the District Court for further proceedings.

In September 2023, the Company filed a petition for rehearing or rehearing en banc with the Court of Appeals.

On January 5, 2024, the Court of Appeals panel denied the petition and issued an amended opinion, still reversing the District Court’s order and remanding the case to the District Court for further proceedings.

On January 26, 2024, the Court of Appeals granted the Company’s motion to stay issuance of the mandate in this case for 90 days.

The Company disputes the claims against it and intends to defend itself vigorously.

COMMITMENTS AND CONTINGENCIES

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• Under the terms of a December 2019 agreement with Novaliq GmbH, Bausch + Lomb has acquired an exclusive license for the commercialization and development in the U.S.

and Canada of NOV03 (perfluorohexyloctane), an investigational drug to treat Dry Eye Disease associated with Meibomian gland dysfunction and may be required to make sales-based milestone payments.

The Company believes it is reasonably possible that these payments over time may approximate $ 48 million, in the aggregate, as well as royalties on future sales.

• Under the terms of an October 2020 agreement with Eyenovia, Inc., Bausch + Lomb has acquired an exclusive license in the U.S.

and Canada for the development and commercialization of an investigational microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression, also known as nearsightedness, in children ages 3-12.

Under the terms of the agreement, the Company may be required to make development and sales-based milestone payments.

and Canada of MIEBO ® (perfluorohexyloctane), formerly known as NOV03, for the treatment of the signs and symptoms of dry eye disease and may be required to make sales-based milestone payments.

The Company believes it is reasonably possible that these payments over time may approximate $ 38 million, in the aggregate.

• Under the terms of a May 2020 agreement with STADA Arzneimittel AG and its development partner, Xbrane Biopharma AB, to commercialize in the U.S.

and Canada a biosimilar candidate to Lucentis (ranibizumab), Bausch + Lomb may be required to make development and sales-based milestone payments.

Due to the nature of these arrangements, the future potential payments related to the attainment of the specified milestones over a period of several years are inherently uncertain.

As of December 31, 2022, no accruals related to the aforementioned agreements exist because the milestone targets are not yet probable of being achieved.

Indemnification Provisions

In the normal course of business, the Company enters into agreements that include indemnification provisions for product liability and other matters.

These provisions are generally subject to maximum amounts, specified claim periods and other conditions and limits.

In addition, the Company is obligated to indemnify its officers and directors in respect of any legal claims or actions initiated against them in their capacity as officers and directors of the Company in accordance with applicable law.

Pursuant to such indemnities, the Company is indemnifying certain former officers and directors in respect of certain litigation and regulatory matters.

As of December 31, 2022 and 2021, no material amounts were accrued for the Company’s obligations under these indemnification provisions.

SEGMENT INFORMATION

Reportable Segments

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

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

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.

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

Certain costs, such as Amortization of intangible assets, Asset impairments, including loss on assets held for sale, Restructuring, integration, separation and IPO costs, and Other expense, net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.

Corporate includes the finance, treasury, certain research and development programs, tax and legal operations of the Company’s businesses and incurs certain expenses, gains and losses related to the overall management of the Company, which are not allocated to the other business segments.

In assessing segment performance and managing operations, management does not review segment assets.

Furthermore, a portion of share-based compensation is considered a corporate cost, since the amount of such expense depends on company-wide performance rather than the operating performance of any single segment.

Segment Revenues and Profit

Segment revenues and profits for the years 2022, 2021 and 2020 were as follows:

(in millions) 2022 2021 2020

Salix $ 2,090 $ 2,074 $ 1,904

International 988 1,166 1,181

Solta Medical 300 308 253

Diversified Products 978 1,121 1,274

Bausch + Lomb 3,768 3,765 3,415

Total revenues $ 8,124 $ 8,434 $ 8,027

Segment profit:

Salix $ 1,489 $ 1,493 $ 1,338

International 324 403 386

Solta Medical 135 167 131

Diversified Products 612 722 814

Bausch + Lomb 874 958 909

Total 3,434 3,743 3,578

Corporate ( 828 ) ( 792 ) ( 619 )

Amortization of intangible assets ( 1,215 ) ( 1,375 ) ( 1,645 )

Goodwill impairments ( 824 ) ( 469 ) —

Asset impairments, including loss on assets held for sale ( 15 ) ( 234 ) ( 114 )

Restructuring, integration, separation and IPO costs ( 63 ) ( 50 ) ( 22 )

Other expense, net ( 35 ) ( 373 ) ( 502 )

Operating income 454 450 676

Interest income 14 7 13

Interest expense ( 1,464 ) ( 1,426 ) ( 1,534 )

Gain (loss) on extinguishment of debt 875 ( 62 ) ( 59 )

Foreign exchange and other ( 8 ) 7 ( 30 )

Loss before income taxes $ ( 129 ) $ ( 1,024 ) $ ( 934 )

Certain reclassifications have been made to segment revenue and profit in order for the prior years to conform to current year presentation.

These reclassifications are not material.

Capital Expenditures

Capital expenditures by segment for the years 2022, 2021 and 2020 were as follows:

(in millions) 2022 2021 2020

Capital expenditures:

Salix $ 3 $ 2 $ 3

International 21 22 29

Solta Medical 3 2 4

Diversified Products 1 — —

Bausch + Lomb 178 201 253

Corporate 14 42 13

Total capital expenditures $ 220 $ 269 $ 302

Revenues by Product and by Product Category

Revenues for the Company’s top ten products for the years 2022, 2021 and 2020 represented 49 %, 43 % and 41 % of total product sales, respectively.

Revenues by segment and product category were as follows:

Salix International Solta Medical Diversified Products Bausch + Lomb Total

(in millions) For the year ended December 31, 2022

Pharmaceuticals $ 2,090 $ 279 $ — $ 826 $ 481 $ 3,676

Devices — — 300 — 1,572 1,872

OTC — 151 — 7 1,453 1,611

Branded and Other Generics — 527 — 120 240 887

Other revenues — 31 — 25 22 78

$ 2,090 $ 988 $ 300 $ 978 $ 3,768 $ 8,124

Salix International Solta Medical Diversified Products Bausch + Lomb Total

For the year ended December 31, 2021

Pharmaceuticals $ 2,066 $ 259 $ — $ 924 $ 514 $ 3,763

Devices — — 308 — 1,595 1,903

OTC — 136 — 7 1,389 1,532

Branded and Other Generics — 738 — 167 239 1,144

Other revenues 8 33 — 23 28 92

$ 2,074 $ 1,166 $ 308 $ 1,121 $ 3,765 $ 8,434

Salix International Solta Medical Diversified Products Bausch + Lomb Total

For the year ended December 31, 2020

Pharmaceuticals $ 1,899 $ 255 $ — $ 1,020 $ 506 $ 3,680

Devices — — 253 — 1,313 1,566

OTC — 112 — 7 1,311 1,430

Branded and Other Generics — 775 — 219 254 1,248

Other revenues 5 39 — 28 31 103

$ 1,904 $ 1,181 $ 253 $ 1,274 $ 3,415 $ 8,027

Geographic Information

Revenues are attributed to a geographic region based on the location of the customer for the years 2022, 2021 and 2020 were as follows:

(in millions) 2022 2021 2020

and Puerto Rico $ 4,836 $ 4,887 $ 4,791

China 413 490 341

Canada 351 343 331

Poland 278 280 238

Mexico 276 256 225

Japan 200 230 226

France 203 208 179

Russia 181 160 137

Germany 147 154 144

United Kingdom 115 116 86

Spain 84 88 78

South Korea 77 76 68

Italy 76 80 71

Other 887 1,066 1,112

$ 8,124 $ 8,434 $ 8,027

Certain reclassifications have been made and are reflected in the table above.

Long-lived assets consisting of property, plant and equipment, net of accumulated depreciation, are attributed to geographic regions based on their physical location as of December 31, 2022 and 2021 were as follows:

(in millions) 2022 2021

and Puerto Rico $ 725 $ 743

Ireland 363 336

Canada 126 123

Germany 89 87

$ 1,600 $ 1,598

Major Customers

Customers that accounted for 10% or more of total revenues were as follows:

2022 2021 2020

AmerisourceBergen Corporation 18 % 18 % 17 %

McKesson Corporation 15 % 16 % 17 %

Cardinal Health, Inc.

13 % 12 % 13 %

As of December 31, 2023, no accruals relate

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures