Bausch Health Companies Inc. [BHC] Filings

10-Q 1 bhc-20210930.htm 10-Q bhc-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		September 30, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-14956

Bausch Health Companies Inc.

(Exact name of registrant as specified in its charter)

British Columbia

Canada

98-0448205

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2150 St. Elzéar Blvd. West, Laval, Québec, Canada H7L 4A8

(Address of Principal Executive Offices) (Zip Code)

(514) 744-6792

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, No Par Value

BHC

New York Stock Exchange

Toronto Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common shares, no par value — 359,330,757 shares outstanding as of October 28, 2021.

BAUSCH HEALTH COMPANIES INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

INDEX


Part I.	Financial Information
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	2
	Consolidated Statements of Comprehensive I ncome (Loss) for the three and nine months ended Sept ember 30, 2021 and 2020	3
	Consolidated Statements of Shareholders' (Deficit) Equity for the three and nine months ended September 30, 2021 and 2020	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	97
Item 4.	Controls and Procedures	98
Part II.	Other Information
Item 1.	Legal Proceedings	99
Item 1A.	Risk Factors	99
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	99
Item 3.	Defaults Upon Senior Securities	99
Item 4.	Mine Safety Disclosures	99
Item 5.	Other Information	99
Item 6.	Exhibits	100
Signatures		101

BAUSCH HEALTH COMPANIES INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

Introductory Note

Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 (this “Form 10-Q”) to the “Company”, “we”, “us”, “our” or similar words or phrases are to Bausch Health Companies Inc. and its subsidiaries, taken together. In this Form 10-Q, references to “$” are to United States (“U.S.”) dollars, references to “€” are to euros and references to "CAD" are to Canadian dollars. Unless otherwise indicated, the statistical and financial data contained in this Form 10-Q are presented as of September 30, 2021.

Forward-Looking Statements

Caution regarding forward-looking information and statements and “Safe-Harbor” statements under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws:

To the extent any statements made in this Form 10-Q contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and may be forward-looking information within the meaning defined under applicable Canadian securities laws (collectively, “forward-looking statements”).

These forward-looking statements relate to, among other things: our business strategy, business plans and prospects and forecasts and changes thereto; product pipeline, prospective products and product approvals, expected launches of new products, product development and future performance and results of current and anticipated products; anticipated revenues for our products; expected research and development ("R&D") and marketing spend; our expected primary cash and working capital requirements for 2021 and beyond; the Company's plans for continued improvement in operational efficiency and the anticipated impact of such plans; our liquidity and our ability to satisfy our debt maturities as they become due; our ability to reduce debt levels; our ability to comply with the financial and other covenants contained in our Fourth Amended and Restated Credit and Guaranty Agreement, as amended by the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018 (the "Restated Credit Agreement"), and senior notes indentures; the impact of our distribution, fulfillment and other third-party arrangements; proposed pricing actions; exposure to foreign currency exchange rate changes and interest rate changes; the outcome of contingencies, such as litigation, subpoenas, investigations, reviews, audits and regulatory proceedings; the anticipated impact of the adoption of new accounting standards; general market conditions; our expectations regarding our financial performance, including revenues, expenses, gross margins and income taxes; our impairment assessments, including the assumptions used therein and the results thereof; the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition, the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts and the Company’s planned actions and responses to this pandemic; the Company’s plan to separate its eye health business, including the structure and timing of completing such separation transaction; and the proposed initial public offering (“IPO”) of the Company’s Solta aesthetic medical device business, including the timing of such IPO.

Forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “should”, “target”, “potential”, “opportunity”, “designed”, “create”, “predict”, “project”, “forecast”, “seek”, “strive”, “ongoing”, “decrease” or “increase” and variations or other similar expressions. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements may not be appropriate for other purposes. Although we have previously indicated certain of these statements set out herein, all of the statements in this Form 10-Q that contain forward-looking statements are qualified by these cautionary statements. These statements are based upon the current expectations and beliefs of management. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making such forward-looking statements, including, but not limited to, factors and assumptions regarding the items previously outlined, those factors, risks and uncertainties outlined below and the assumption that none of these factors, risks and uncertainties will cause actual results or events to differ materially from those described in such forward-looking statements. Actual results may differ materially from those expressed or implied in such statements. Important factors, risks and uncertainties that could cause actual results to differ materially from these expectations include, among other things, the following:

•the risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, the fear of that pandemic, the availability and effectiveness of vaccines for COVID-19 (including with respect to current or future variants), COVID-19 vaccine immunization rates, the emergence of variant strains of COVID-19, the evolving reaction of

governments, private sector participants and the public to that pandemic, and the potential effects and economic impact of the pandemic and the reaction to it, the severity, duration and future impact of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on the Company, including, but not limited to, its supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease);

•with respect to the proposed separation of the Company’s eye health business, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the separation transaction, the expected timing of completion of the separation transaction and its terms (including the Company’s expectation that it will launch the IPO of the Bausch + Lomb entity as early as thirty days subsequent to the IPO of the Company’s Solta aesthetic medical device business, subject to market conditions and receipt of regulatory, stock exchange and other approvals and the Company’s expectation that the separation transaction will be completed following the expiry of customary lock-ups and achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals), the Company’s ability to complete the separation transaction considering the various conditions to the completion of the separation transaction (some of which are outside the Company’s control, including conditions related to regulatory matters and a possible shareholder vote, if applicable), that market or other conditions are no longer favorable to completing the transaction, that any shareholder, stock exchange, regulatory or other approval (if required) is not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of or following the separation transaction, diversion of management time on separation transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the separation transaction, the qualification of the separation transaction as a tax-free transaction for Canadian and/or U.S. federal income tax purposes (including whether or not an advance ruling from either or both of the Canada Revenue Agency and the Internal Revenue Service will be sought or obtained), potential dissynergy costs resulting from the separation transaction, the impact of the separation transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets the Company is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting the Company’s business;

•with respect to the proposed IPO of the Company’s Solta aesthetic medical device business, the risks and uncertainties include, but are not limited to, risks relating to the expected timing of completion of such transaction (including the Company’s expectation that it will launch such IPO as early as December 2021 or January 2022, subject to market conditions and receipt of regulatory, stock exchange and other approvals) and the Company’s ability to complete such transaction, that market or other conditions are no longer favorable to completing the transaction on a timely basis or at all, the receipt of (or failure to receive) any shareholder, stock exchange, regulatory and other approvals required in connection with the transaction and the timing of receipt of such approvals, business disruption during the pendency of or following such transaction, diversion of management time on transaction-related issues, retention of Solta aesthetic medical device management team members, the reaction of customers and other parties to such transaction, the impact of such transaction on relationships with customers, suppliers, employees and other business counterparties, and other events that could adversely impact the completion of such transaction, including industry or economic conditions outside of Bausch Health’s control. In particular, the Company can offer no assurance that any IPO will occur at all, or that any such transaction will occur on the timelines anticipated by the Company;

•the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our past distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor Rx Services, LLC ("Philidor")), including a number of pending non-class securities litigations (including certain pending opt-out actions in the U.S. related to the previously settled securities class action (which remains subject to an objector's appeal of the Court's final approval order) and certain opt-out actions in Canada relating to the recently settled class action in Canada) and purported class actions under the federal Racketeer Influenced Corrupt Organizations Act (“RICO”) (the settlement of which remains subject to final court approval) and other claims, investigations or proceedings that may be initiated or that may be asserted;

•potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the past and ongoing public scrutiny of our past distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor;

•the past and ongoing scrutiny of our legacy business practices, including with respect to pricing, and any pricing controls or price adjustments that may be sought or imposed on our products as a result thereof;

iii

•pricing decisions that we have implemented, or may in the future elect to implement, such as the Patient Access and Pricing Committee’s commitment that the average annual price increase for our branded prescription pharmaceutical products will be set at no greater than single digits, or any future pricing actions we may take following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);

•legislative or policy efforts, including those that may be introduced and passed by the U.S. Congress, designed to reduce patient out-of-pocket costs for medicines, which could result in new mandatory rebates and discounts or other pricing restrictions, controls or regulations (including mandatory price reductions);

•ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the U.S. Food and Drug Administration (the "FDA") and equivalent agencies outside of the U.S. and the results thereof;

•actions by the FDA or other regulatory authorities with respect to our products or facilities;

•compliance with the legal and regulatory requirements of our marketed products;

•our substantial debt (and potential additional future indebtedness) and current and future debt service obligations, our ability to reduce our outstanding debt levels and the resulting impact on our financial condition, cash flows and results of operations;

•our ability to comply with the financial and other covenants contained in our Restated Credit Agreement, senior notes indentures, 2023 Revolving Credit Facility (as defined below) and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional obligations we are able to incur pursuant to other covenants, our ability to draw under our 2023 Revolving Credit Facility and restrictions on our ability to make certain investments and other restricted payments;

•any default under the terms of our senior notes indentures or Restated Credit Agreement and our ability, if any, to cure or obtain waivers of such default;

•any downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;

•any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2021 or beyond, including as a result of the impacts of the COVID-19 pandemic on our business and operations, which could lead to, among other things: (i) a failure to meet the financial and/or other covenants contained in our Restated Credit Agreement and/or senior notes indentures and/or (ii) impairment in the goodwill associated with certain of our reporting units or impairment charges related to certain of our products or other intangible assets, which impairments could be material;

•changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units or impairment charges related to certain of our products or other intangible assets;

•the uncertainties associated with the acquisition and launch of new products, assets and businesses, including, but not limited to, our ability to provide the time, resources, expertise and funds required for the commercial launch of new products, the acceptance and demand for new products, and the impact of competitive products and pricing, which could lead to material impairment charges;

•our ability or inability to extend the profitable life of our products, including through line extensions and other life-cycle programs;

•our ability to retain, motivate and recruit executives and other key employees;

•our ability to implement effective succession planning for our executives and key employees;

•factors impacting our ability to stabilize and reposition our Ortho Dermatologics business to generate additional value, including the success of recently launched products and the approval of pipeline products (and the timing of such approvals);

•factors impacting our ability to achieve anticipated revenues for our products, including changes in anticipated marketing spend on such products and launch of competing products;

•factors impacting our ability to achieve anticipated market acceptance for our products, including acceptance of the pricing, effectiveness of promotional efforts, reputation of our products and launch of competing products;

•the challenges and difficulties associated with managing a large complex business, which has, in the past, grown rapidly;

•our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;

•our ability to effectively operate and grow our businesses in light of the challenges that the Company has faced and market conditions, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our past pricing and other practices, limitations on the way we conduct business imposed by the covenants contained in our Restated Credit Agreement, senior notes indentures and the agreements governing our other indebtedness, and the impacts of the COVID-19 pandemic;

•the extent to which our products are reimbursed by government authorities, pharmacy benefit managers ("PBMs") and other third-party payors; the impact our distribution, pricing and other practices may have on the decisions of such government authorities, PBMs and other third-party payors to reimburse our products; and the impact of obtaining or maintaining such reimbursement on the price and sales of our products;

•the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price and sales of our products in connection therewith;

•the consolidation of wholesalers, retail drug chains and other customer groups and the impact of such industry consolidation on our business;

•our ability to maintain strong relationships with physicians and other healthcare professionals;

•our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;

•the implementation of the Organisation for Economic Co-operation and Development inclusive framework on Base Erosion and Profit Shifting, including the proposed global minimum corporate tax rate, by the countries in which we operate;

•the actions of our third-party partners or service providers of research, development, manufacturing, marketing, distribution or other services, including their compliance with applicable laws and contracts, which actions may be beyond our control or influence, and the impact of such actions on our Company;

•the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering and operating in new and different geographic markets (including the challenges created by new and different regulatory regimes in such countries and the need to comply with applicable anti-bribery and economic sanctions laws and regulations);

•adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in certain of the countries in which we do business;

•the impact of the United States-Mexico-Canada Agreement and any potential changes to other trade agreements;

•the trade conflict between the United States and China;

•our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property;

•the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;

•our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis and the difficulties, challenges, time and resources associated with the integration of acquired companies, businesses and products;

•any divestitures of our assets or businesses and our ability to successfully complete any such divestitures on commercially reasonable terms and on a timely basis, or at all, and the impact of any such divestitures on our Company, including the reduction in the size or scope of our business or market share, loss of revenue, any loss on

sale, including any resultant impairments of goodwill or other assets, or any adverse tax consequences suffered as a result of any such divestitures;

•the expense, timing and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, subpoenas, tax and other regulatory audits, examinations, reviews and regulatory proceedings against us or relating to us and settlements thereof;

•our ability to negotiate the terms of or obtain court approval for the settlement of certain legal and regulatory proceedings;

•our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;

•the disruption of delivery of our products and the routine flow of manufactured goods;

•economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;

•interest rate risks associated with our floating rate debt borrowings;

•our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements;

•our ability to effectively promote our own products and those of our co-promotion partners;

•the success of our fulfillment arrangements with Walgreen Co., including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, PBMs, third-party payors and governmental agencies), and the continued compliance of such arrangements with applicable laws;

•our ability to secure and maintain third-party research, development, manufacturing, licensing, marketing or distribution arrangements;

•the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits, product liability claims and damages and/or recalls or withdrawals of products from the market;

•the mandatory or voluntary recall or withdrawal of our products from the market and the costs associated therewith;

•the availability of, and our ability to obtain and maintain, adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third-party insurance or self-insurance;

•our indemnity agreements, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material;

•the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada, European Medicines Agency (“EMA”) and similar agencies in other countries, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

•the results of continuing safety and efficacy studies by industry and government agencies;

•the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as other factors impacting the commercial success of our products, which could lead to material impairment charges;

•uncertainties around the successful improvement and modification of our existing products and development of new products, which may require significant expenditures and efforts;

•the results of management reviews of our research and development portfolio (including following the receipt of clinical results or feedback from the FDA or other regulatory authorities), which could result in terminations of specific projects which, in turn, could lead to material impairment charges;

•the seasonality of sales of certain of our products;

•declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;

•compliance by the Company or our third-party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act and the Canadian Corruption of Foreign Public Officials Act), worldwide economic sanctions and/or export laws, worldwide environmental laws and regulation and privacy and security regulations;

•the impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 and potential amendment thereof and other legislative and regulatory health care reforms in the countries in which we operate, including with respect to recent government inquiries on pricing;

•the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its businesses and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;

•the impact of changes in federal laws and policy that may be undertaken under the Biden administration;

•illegal distribution or sale of counterfeit versions of our products;

•interruptions, breakdowns or breaches in our information technology systems; and

•risks in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 24, 2021, risks in Item 1A. “Risk Factors” of Part II of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed on August 3, 2021, and risks detailed from time to time in our other filings with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 24, 2021, under Item 1A. “Risk Factors”, in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed on August 3, 2021, under Item 1A. “Risk Factors” of Part II and in the Company’s other filings with the SEC and the CSA. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. These forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect actual outcomes, except as required by law. We caution that, as it is not possible to predict or identify all relevant factors that may impact forward-looking statements, the foregoing list of important factors that may affect future results is not exhaustive and should not be considered a complete statement of all potential risks and uncertainties.

vii

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

(Unaudited)


	September 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	690	$	605
Restricted cash	1,214		1,211
Trade receivables, net	1,730		1,577
Inventories, net	1,058		1,094
Prepaid expenses and other current assets	632		855
Total current assets	5,324		5,342
Property, plant and equipment, net	1,584		1,567
Intangible assets, net	7,258		8,445
Goodwill	12,477		13,044
Deferred tax assets, net	2,266		2,137
Other non-current assets	343		664
Total assets	$	29,252	$	31,199
Liabilities
Current liabilities:
Accounts payable	$	455	$	337
Accrued and other current liabilities	4,982		4,576
Total current liabilities	5,437		4,913
Acquisition-related contingent consideration	207		216
Non-current portion of long-term debt	22,358		23,925
Deferred tax liabilities, net	513		528
Other non-current liabilities	872		1,012
Total liabilities	29,387		30,594
Commitments and contingencies (Note 18)
(Deficit) Equity
Common shares, no par value, unlimited shares authorized, 359,154,635 and 355,422,347 issued and outstanding at September 30, 2021 and December 31, 2020, respectively	10,312		10,227
Additional paid-in capital	437		454
Accumulated deficit	(9,030)		(8,013)
Accumulated other comprehensive loss	(1,923)		(2,133)
Total Bausch Health Companies Inc. shareholders’ (deficit) equity	(204)		535
Noncontrolling interest	69		70
Total (deficit) equity	(135)		605
Total liabilities and (deficit) equity	$	29,252	$	31,199

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

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Product sales	$	2,088	$	2,111	$	6,167	$	5,734
Other revenues	23		27		71		80
	2,111		2,138		6,238		5,814
Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)	574		578		1,742		1,565
Cost of other revenues	8		12		26		39
Selling, general and administrative	653		572		1,944		1,731
Research and development	121		103		348		333
Amortization of intangible assets	338		391		1,055		1,263
Goodwill impairments	—		—		469		—
Asset impairments, including loss on assets held for sale	18		2		213		17
Restructuring, integration, separation and IPO costs	8		2		29		13
Other (income) expense, net	(183)		18		329		172
	1,537		1,678		6,155		5,133
Operating income	574		460		83		681
Interest income	2		2		6		11
Interest expense	(351)		(374)		(1,083)		(1,155)
Loss on extinguishment of debt	(12)		—		(62)		(51)
Foreign exchange and other	3		(13)		11		(26)
Income (loss) before (provision for) benefit from income taxes	216		75		(1,045)		(540)
(Provision for) benefit from income taxes	(25)		(5)		36		133
Net income (loss)	191		70		(1,009)		(407)
Net (income) loss attributable to noncontrolling interest	(3)		1		(8)		—
Net income (loss) attributable to Bausch Health Companies Inc.	$	188	$	71	$	(1,017)	$	(407)

Earnings (loss) per share attributable to Bausch Health Companies Inc.
Basic	$	0.52	$	0.20	$	(2.84)	$	(1.15)
Diluted	$	0.52	$	0.20	$	(2.84)	$	(1.15)

Weighted-average common shares
Basic	359.6		355.6		358.5		354.7
Diluted	364.0		357.8		358.5		354.7

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

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	191	$	70	$	(1,009)	$	(407)
Other comprehensive (loss) income
Foreign currency translation adjustment	(80)		20		(128)		(118)
Pension and postretirement benefit plan adjustments, net of income taxes	(1)		(1)		(1)		(2)
Other comprehensive (loss) income	(81)		19		(129)		(120)
Comprehensive income (loss)	110		89		(1,138)		(527)
Comprehensive income attributable to noncontrolling interest	(3)		(2)		(9)		(1)
Comprehensive income (loss) attributable to Bausch Health Companies Inc.	$	107	$	87	$	(1,147)	$	(528)

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

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

(in millions)

(Unaudited)


	Bausch Health Companies Inc. Shareholders' (Deficit) Equity
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Bausch Health Companies Inc. Shareholders' (Deficit) Equity		Non- controlling Interest		Total (Deficit) Equity
	Shares	Amount
	Three Months Ended September 30, 2021
Balances, July 1, 2021	358.7	$	10,300	$	413	$	(9,218)	$	(2,182)	$	(687)	$	76	$	(611)
Common shares issued under share-based compensation plans	0.5	12		(6)		—		—		6		—		6
Share-based compensation	—	—		33		—		—		33		—		33
Employee withholding taxes related to share-based awards	—	—		(3)		—		—		(3)		—		(3)
Release of foreign currency translation losses upon disposal of assets held for sale	—	—		—		—		340		340		—		340
Noncontrolling interest distributions	—	—		—		—		—		—		(10)		(10)
Net income	—	—		—		188		—		188		3		191
Other comprehensive loss	—	—		—		—		(81)		(81)		—		(81)
Balances, September 30, 2021	359.2	$	10,312	$	437	$	(9,030)	$	(1,923)	$	(204)	$	69	$	(135)

	Three Months Ended September 30, 2020
Balances, July 1, 2020	354.9	$	10,217	$	411	$	(7,931)	$	(2,223)	$	474	$	72	$	546
Common shares issued under share-based compensation plans	0.1	2		(2)		—		—		—		—		—
Share-based compensation	—	—		27		—		—		27		—		27
Employee withholding taxes related to share-based awards	—	—		(1)		—		—		(1)		—		(1)
Noncontrolling interest distributions	—	—		—		—		—		—		(6)		(6)
Net income (loss)	—	—		—		71		—		71		(1)		70
Other comprehensive income	—	—		—		—		16		16		3		19
Balances, September 30, 2020	355.0	$	10,219	$	435	$	(7,860)	$	(2,207)	$	587	$	68	$	655

	Nine Months Ended September 30, 2021
Balances, January 1, 2021	355.4	$	10,227	$	454	$	(8,013)	$	(2,133)	$	535	$	70	$	605
Common shares issued under share-based compensation plans	3.8	85		(64)		—		—		21		—		21
Share-based compensation	—	—		95		—		—		95		—		95
Employee withholding taxes related to share-based awards	—	—		(48)		—		—		(48)		—		(48)
Release of foreign currency translation losses upon disposal of assets held for sale	—	—		—		—		340		340		—		340
Noncontrolling interest distributions	—	—		—		—		—		—		(10)		(10)
Net (loss) income	—	—		—		(1,017)		—		(1,017)		8		(1,009)
Other comprehensive (loss) income	—	—		—		—		(130)		(130)		1		(129)
Balances, September 30, 2021	359.2	$	10,312	$	437	$	(9,030)	$	(1,923)	$	(204)	$	69	$	(135)

	Nine Months Ended September 30, 2020
Balances, January 1, 2020	352.6	$	10,172	$	429	$	(7,452)	$	(2,086)	$	1,063	$	73	$	1,136
Application of new accounting standard: financial instruments - credit losses	—	—		—		(1)		—		(1)		—		(1)
Common shares issued under share-based compensation plans	2.4	47		(45)		—		—		2		—		2
Share-based compensation	—	—		81		—		—		81		—		81
Employee withholding taxes related to share-based awards	—	—		(30)		—		—		(30)		—		(30)
Noncontrolling interest distributions	—	—		—		—		—		—		(6)		(6)
Net loss	—	—		—		(407)		—		(407)		—		(407)
Other comprehensive (loss) income	—	—		—		—		(121)		(121)		1		(120)
Balances, September 30, 2020	355.0	$	10,219	$	435	$	(7,860)	$	(2,207)	$	587	$	68	$	655

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

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Cash Flows From Operating Activities
Net loss	$	(1,009)	$	(407)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of intangible assets	1,189		1,397
Amortization and write-off of debt premiums, discounts and issuance costs	42		45
Asset impairments, including loss on assets held for sale	213		17
Goodwill impairments	469		—
Acquisition-related contingent consideration	8		26
Allowances for losses on trade receivable and inventories	51		52
Deferred income taxes	(137)		(213)
Net gain on sale of assets	(2)		(1)
Additions to accrued legal settlements	534		147
Payments of accrued legal settlements	(144)		(82)
Share-based compensation	95		81
Foreign exchange loss	8		14
Gain excluded from hedge effectiveness	(17)		(17)
Loss on extinguishment of debt	62		51
Payments of contingent consideration adjustments, including accretion	(16)		—
Other	(33)		(7)
Changes in operating assets and liabilities:
Trade receivables	(177)		67
Inventories	(62)		(178)
Prepaid expenses and other current assets	37		11
Accounts payable, accrued and other liabilities	291		(286)
Net cash provided by operating activities	1,402		717
Cash Flows From Investing Activities
Purchases of property, plant and equipment	(191)		(222)
Payments for intangible and other assets	(9)		(3)
Purchases of marketable securities	(14)		(3)
Proceeds from sale of marketable securities	11		7
Proceeds from sale of assets and businesses, net of costs to sell	669		21
Interest settlements from cross-currency swaps	23		23
Net cash provided by (used in) investing activities	489		(177)
Cash Flows From Financing Activities
Issuance of long-term debt, net of discounts	1,576		1,476
Repayments of long-term debt	(3,200)		(3,162)
Proceeds from the issuances of short-term debt	—		1
Repayments of short-term debt