Bausch Health Companies Inc. [BHC] Filings

10-Q 1 bhc-20220930.htm 10-Q bhc-20220930

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, 2022
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 — 361,868,131 shares outstanding as of October 28, 2022.

BAUSCH HEALTH COMPANIES INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

INDEX


Part I.	Financial Information
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021	3
	Consolidated Statements of Shareholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 and 2021	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	100
Item 4.	Controls and Procedures	100
Part II.	Other Information
Item 1.	Legal Proceedings	101
Item 1A.	Risk Factors	101
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	103
Item 3.	Defaults Upon Senior Securities	103
Item 4.	Mine Safety Disclosures	103
Item 5.	Other Information	103
Item 6.	Exhibits	103
Signatures		105

BAUSCH HEALTH COMPANIES INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

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, 2022 (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, 2022.

Forward-Looking Statements

This Form 10-Q contains 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 of applicable Canadian securities laws (collectively, “forward-looking statements”), as described in more detail under the heading “Forward-Looking Statements” in Item 2 of Part I of this Form 10-Q. Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in (i) our Annual Report on Form 10-K for the year ended December 31, 2021, filed on February 23, 2022, under Item 1A. “Risk Factors”; (ii) under Item 1A. Risk Factors in Part II of this Form 10-Q; and (iii) in the Company’s other filings with the U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

(Unaudited)


	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	486	$	582
Restricted cash and other settlement deposits	11		1,537
Trade receivables, net	1,739		1,775
Inventories, net	1,056		993
Prepaid expenses and other current assets	718		720
Total current assets	4,010		5,607
Property, plant and equipment, net	1,507		1,598
Intangible assets, net	6,024		6,948
Goodwill	12,044		12,457
Deferred tax assets, net	2,372		2,252
Other non-current assets	341		340
Total assets	$	26,298	$	29,202
Liabilities
Current liabilities:
Accounts payable	$	486	$	407
Accrued and other current liabilities	2,934		4,791
Current portion of long-term debt	411		—
Total current liabilities	3,831		5,198
Acquisition-related contingent consideration	189		202
Non-current portion of long-term debt	20,804		22,654
Deferred tax liabilities, net	422		529
Other non-current liabilities	619		653
Total liabilities	25,865		29,236
Commitments and contingencies (Note 18)
Equity (Deficit)
Common shares, no par value, unlimited shares authorized, 361,781,292 and 359,405,748 issued and outstanding at September 30, 2022 and December 31, 2021, respectively	10,387		10,317
Additional paid-in capital	129		462
Accumulated deficit	(8,776)		(8,961)
Accumulated other comprehensive loss	(2,265)		(1,924)
Total Bausch Health Companies Inc. shareholders’ deficit	(525)		(106)
Noncontrolling interest	958		72
Total equity (deficit)	433		(34)
Total liabilities and equity (deficit)	$	26,298	$	29,202

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,
	2022		2021		2022		2021
Revenues
Product sales	$	2,026	$	2,088	$	5,871	$	6,167
Other revenues	20		23		60		71
	2,046		2,111		5,931		6,238
Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)	578		574		1,691		1,742
Cost of other revenues	6		8		21		26
Selling, general and administrative	661		653		1,959		1,944
Research and development	133		121		387		348
Amortization of intangible assets	290		338		902		1,055
Goodwill impairments	119		—		202		469
Asset impairments, including loss on assets held for sale	1		18		15		213
Restructuring, integration, separation and IPO costs	10		8		58		29
Other expense (income), net	4		(183)		6		329

	1,802		1,537		5,241		6,155
Operating income	244		574		690		83
Interest income	3		2		8		6
Interest expense	(385)		(351)		(1,157)		(1,083)
Gain (loss) on extinguishment of debt	570		(12)		683		(62)
Foreign exchange and other	7		3		4		11
Income (loss) before income taxes	439		216		228		(1,045)
(Provision for) benefit from income taxes	(36)		(25)		(30)		36
Net income (loss)	403		191		198		(1,009)
Net income attributable to noncontrolling interest	(4)		(3)		(13)		(8)
Net income (loss) attributable to Bausch Health Companies Inc.	$	399	$	188	$	185	$	(1,017)

Earnings (loss) per share attributable to Bausch Health Companies Inc.
Basic	$	1.10	$	0.52	$	0.51	$	(2.84)

Diluted	$	1.10	$	0.52	$	0.51	$	(2.84)

Weighted-average common shares
Basic	362.5		359.6		361.8		358.5
Diluted	363.4		364.0		363.7		358.5

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,
	2022		2021		2022		2021
Net income (loss)	$	403	$	191	$	198	$	(1,009)
Other comprehensive loss
Foreign currency translation adjustment	(243)		(80)		(465)		(128)
Pension and postretirement benefit plan adjustments, net of income taxes	(1)		(1)		6		(1)
Other comprehensive loss	(244)		(81)		(459)		(129)
Comprehensive income (loss)	159		110		(261)		(1,138)
Comprehensive income attributable to noncontrolling interest	(23)		(3)		(32)		(9)
Comprehensive income (loss) attributable to Bausch Health Companies Inc.	$	136	$	107	$	(293)	$	(1,147)

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

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in millions)

(Unaudited)


	Bausch Health Companies Inc. Shareholders’ Equity (Deficit)
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Bausch Health Companies Inc. Shareholders’ Deficit		Non- controlling Interest		Total Equity (Deficit)
	Shares	Amount
	Three Months Ended September 30, 2022
Balances, July 1, 2022	361.6	$	10,380	$	104	$	(9,175)	$	(2,002)	$	(693)	$	946	$	253

Common shares issued under share-based compensation plans	0.2	7		(7)		—		—		—		—		—
Share-based compensation	—	—		33		—		—		33		—		33
Employee withholding taxes related to share-based awards	—	—		(1)		—		—		(1)		—		(1)

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

Net income	—	—		—		399		—		399		4		403
Other comprehensive (loss) income	—	—		—		—		(263)		(263)		19		(244)
Balances, September 30, 2022	361.8	$	10,387	$	129	$	(8,776)	$	(2,265)	$	(525)	$	958	$	433

	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)

	Nine Months Ended September 30, 2022
Balances, January 1, 2022	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	2.4	70		(67)		—		—		3		—		3
Share-based compensation	—	—		91		—		—		91		—		91
Employee withholding taxes related to share-based awards	—	—		(30)		—		—		(30)		—		(30)
Noncontrolling interest distributions	—	—		—		—		—		—		(11)		(11)
Net income	—	—		—		185		—		185		13		198
Other comprehensive (loss) income	—	—		—		—		(478)		(478)		19		(459)
Balances, September 30, 2022	361.8	$	10,387	$	129	$	(8,776)	$	(2,265)	$	(525)	$	958	$	433

	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)

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,
	2022		2021
Cash Flows From Operating Activities
Net income (loss)	$	198	$	(1,009)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of intangible assets	1,034		1,189
Amortization and write-off of debt premiums, discounts and issuance costs	86		42
Asset impairments, including loss on assets held for sale	15		213
Goodwill impairments	202		469
Acquisition-related contingent consideration	2		8
Allowances for losses on trade receivable and inventories	36		51
Deferred income taxes	(195)		(137)
Net gain on sale of assets	(3)		(2)
Adjustments to accrued legal settlements	7		534
Payments of accrued legal settlements	(1,572)		(144)
Share-based compensation	91		95
Foreign exchange (gain) loss	(1)		8
Gain excluded from hedge effectiveness	(3)		(17)
(Gain) loss on extinguishment of debt	(683)		62
Third party fees paid in connection with the Exchange Offer	(31)		—
Payments of contingent consideration adjustments, including accretion	(1)		(16)
Other	(11)		(33)
Changes in operating assets and liabilities:
Trade receivables	(26)		(177)
Inventories	(194)		(62)
Prepaid expenses and other current assets	(32)