Bausch + Lomb (BLCO) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section presents Bausch + Lomb Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents Bausch + Lomb Corporation's unaudited condensed consolidated financial statements and related notes Condensed Consolidated Balance Sheets The balance sheet reflects increased total assets and liabilities as of June 30, 2025, driven by property, plant and equipment, goodwill, and long-term debt | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change (in millions) | | :-------------------------------- | :----------------------------- | :------------------------------ | :------------------- | | Total assets | $13,832 | $13,469 | $363 | | Total liabilities | $7,324 | $6,925 | $399 | | Total equity | $6,508 | $6,544 | $(36) | - Goodwill increased by $144 million from $4,523 million to $4,667 million, and property, plant and equipment, net, increased by $195 million from $1,485 million to $1,680 million[24] - Long-term debt increased by $187 million from $4,744 million to $4,931 million[24] Condensed Consolidated Statements of Operations Revenues increased, but operating income declined, while net loss improved due to a significant benefit from income taxes for the three and six months ended June 30, 2025 | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenues | $1,278 | $1,216 | $62 | 5% | | Operating (loss) income | $(11) | $26 | $(37) | -142% | | Net loss attributable to Bausch + Lomb Corporation | $(62) | $(151) | $89 | 59% | | Basic and diluted loss per share | $(0.18) | $(0.43) | $0.25 | 58% | | Metric | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenues | $2,415 | $2,315 | $100 | 4% | | Operating (loss) income | $(94) | $32 | $(126) | -394% | | Net loss attributable to Bausch + Lomb Corporation | $(274) | $(318) | $44 | 14% | | Basic and diluted loss per share | $(0.78) | $(0.90) | $0.12 | 13% | - The benefit from income taxes for the three months ended June 30, 2025, was $89 million, a significant improvement compared to a provision of $(72) million in the prior year, contributing to the reduced net loss[27] Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income significantly improved for the three and six months ended June 30, 2025, primarily due to favorable foreign currency translation | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (in millions) | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------- | | Net loss | $(58) | $(148) | $90 | | Foreign currency translation adjustment | $114 | $(21) | $135 | | Comprehensive income (loss) | $56 | $(168) | $224 | | Metric | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------- | | Net loss | $(269) | $(311) | $42 | | Foreign currency translation adjustment | $195 | $(62) | $257 | | Comprehensive income (loss) | $(74) | $(373) | $299 | Condensed Consolidated Statements of Shareholders' Equity Total shareholders' equity slightly decreased, reflecting a net loss partially offset by other comprehensive income and share-based compensation | Metric | June 30, 2025 (in millions) | January 1, 2025 (in millions) | Change (in millions) | | :--------------------------------------- | :----------------------------- | :---------------------------- | :------------------- | | Total Bausch + Lomb Corporation shareholders' equity | $6,440 | $6,473 | $(33) | | Accumulated deficit | $(845) | $(571) | $(274) | | Accumulated other comprehensive loss | $(1,191) | $(1,385) | $194 | - Share-based compensation contributed $58 million to additional paid-in capital for the six months ended June 30, 2025[29] Condensed Consolidated Statements of Cash Flows Operating cash flow significantly decreased due to refinancing fees, while investing and financing activities saw notable changes | Cash Flow Activity | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | | Net cash provided by operating activities | $10 | $56 | $(46) | | Net cash used in investing activities | $(206) | $(131) | $(75) | | Net cash provided by financing activities | $121 | $52 | $69 | | Net decrease in cash and cash equivalents and restricted cash | $(44) | $(32) | $(12) | - The decrease in operating cash flow is primarily attributed to financing fees associated with the June 2025 refinancing, partially offset by favorable changes in operating assets and liabilities[304] - Investing activities saw a $75 million increase in cash used, mainly due to higher purchases of property, plant and equipment[306] Notes to the Condensed Consolidated Financial Statements These notes detail financial statements, covering business segments, accounting policies, acquisitions, debt refinancing, and legal proceedings 1. DESCRIPTION OF BUSINESS Bausch + Lomb is a global eye health company operating in three segments, with BHC holding 88% of shares and evaluating full separation - Bausch + Lomb operates in three reportable segments: Vision Care (contact lenses, consumer eye care), Pharmaceuticals (proprietary and generic eye medications), and Surgical (medical device equipment, IOLs, surgical instruments)[33][174] - Bausch Health Companies Inc. (BHC) directly or indirectly holds approximately 88% of Bausch + Lomb's issued and outstanding common shares as of July 23, 2025[34] - BHC is still evaluating the full separation of Bausch + Lomb, which may include a distribution of shares, monetization of ownership, or a sale of the company, contingent on achieving targeted debt leverage ratios and obtaining necessary approvals[35] 2. SIGNIFICANT ACCOUNTING POLICIES Financial statements are prepared under U.S. GAAP, with no new accounting standards adopted in H1 2025, but future ASU impacts are being evaluated - The financial statements are prepared in accordance with U.S. GAAP for interim financial reporting and are consistent with the accounting policies used in the Annual Report on Form 10-K for the year ended December 31, 2024[36] - No new accounting standards were adopted during the six months ended June 30, 2025[40] - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures, effective FY2025) and ASU 2024-03 (Expense Disaggregation Disclosures, effective FY2026) on its future disclosures[41][42] 3. REVENUE RECOGNITION Revenue from eye health product sales is recognized upon customer control, with variable consideration and credit loss allowances estimated - Revenue is primarily generated from product sales in eye health, including branded/generic pharmaceuticals, OTC products, and medical devices (contact lenses, IOLs, surgical equipment)[44] - Revenue for product sales is recognized at a point in time, generally upon shipment or customer receipt, or upon delivery and installation for surgical equipment[47][48] - IOLs sold on consignment are recognized upon notification of use[48] | Provision Type | Reserve Balance, Jan 1, 2025 (in millions) | Current Period Provision (in millions) | Payments and Credits (in millions) | Reserve Balance, June 30, 2025 (in millions) | | :----------------------- | :--------------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------------- | | Discounts and Allowances | $120 | $225 | $(228) | $117 | | Returns | $88 | $32 | $(44) | $76 | | Rebates | $497 | $932 | $(914) | $515 | | Chargebacks | $74 | $295 | $(308) | $61 | | Distribution Fees | $26 | $47 | $(44) | $29 | | Total | $805 | $1,531 | $(1,538) | $798 | 4. RELATED PARTIES Bausch + Lomb maintains a relationship with BHC, governed by separation agreements, with $4 million in related charges for the six months ended June 30, 2025 - BHC holds approximately 88% of Bausch + Lomb's common shares as of July 23, 2025[60] - The company has various agreements with BHC, including a Master Separation Agreement, Transition Services Agreement (TSA), Tax Matters Agreement, and Employee Matters Agreement, which define their post-IPO relationship[64][67] - Charges related to these agreements, primarily reflected in Selling, general and administrative expenses, were $4 million for the six months ended June 30, 2025, up from $3 million in the prior year[65] 5. ACQUISITIONS Strategic acquisitions in 2025 and 2024, including Whitecap Biosciences, Elios Vision, and Trukera Medical, expanded the eye health portfolio - On January 3, 2025, Bausch + Lomb acquired Whitecap Biosciences for an upfront payment of approximately $28 million, expensed as acquired in-process research and development costs[66][68] - On December 10, 2024, the company acquired Elios Vision for approximately $99 million cash and potential future milestone obligations, adding the ELIOS procedure for glaucoma treatment[70] - On July 19, 2024, the company acquired Trukera Medical for approximately $24 million, expanding its dry eye market presence with the ScoutPro device[71] 6. FAIR VALUE MEASUREMENTS Financial assets and liabilities are measured at fair value; acquisition-related contingent consideration decreased, and long-term debt fair value was $5,093 million | Financial Instrument | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------- | :----------------------------- | :------------------------------ | | Cash equivalents (Level 1 & 2) | $101 | $60 | | Foreign currency exchange contracts (assets) | $2 | $7 | | Acquisition-related contingent consideration (Level 3) | $96 | $123 | | Foreign currency exchange contracts (liabilities) | $5 | $3 | | Cross-currency swaps (liabilities) | $162 | $34 | - Acquisition-related contingent consideration, a Level 3 measurement, decreased by $27 million for the six months ended June 30, 2025, primarily due to fair value adjustments[83] - The fair value of long-term debt was $5,093 million as of June 30, 2025, an increase from $4,898 million at December 31, 2024, estimated using quoted market prices (Level 2)[84] 7. INVENTORIES Net inventories slightly increased to $1,051 million as of June 30, 2025, primarily driven by finished goods | Inventory Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------ | :----------------------------- | :------------------------------ | | Raw materials | $262 | $262 | | Work in process | $85 | $99 | | Finished goods | $704 | $675 | | Total Inventories, net | $1,051 | $1,036 | 8. INTANGIBLE ASSETS AND GOODWILL Net intangible assets decreased, while goodwill increased to $4,667 million due to foreign exchange, with no impairment found after testing | Asset Type | June 30, 2025 (Net Carrying Amount, in millions) | December 31, 2024 (Net Carrying Amount, in millions) | | :--------------------------------------- | :----------------------------------------------- | :------------------------------------------------ | | Total finite-lived intangible assets | $1,563 | $1,696 | | Acquired in-process research and development intangible asset | $100 | $100 | | B&L Trademark | $1,698 | $1,698 | | Total Intangible Assets, net | $3,361 | $3,494 | | Segment | Goodwill, Dec 31, 2024 (in millions) | Foreign Exchange Impact (in millions) | Goodwill, June 30, 2025 (in millions) | | :-------------- | :----------------------------------- | :------------------------------------ | :---------------------------------- | | Vision Care | $3,529 | $28 | $3,557 | | Pharmaceuticals | $644 | $104 | $748 | | Surgical | $350 | $12 | $362 | | Total Goodwill | $4,523 | $144 | $4,667 | - A quantitative goodwill impairment test was performed as of June 30, 2025, due to a decline in market capitalization, but no impairment was recorded as the fair value of each reporting unit exceeded its carrying value by more than 25%[91][92] 9. ACCRUED AND OTHER CURRENT LIABILITIES Accrued and other current liabilities increased to $1,363 million as of June 30, 2025, mainly due to product rebates and other accrued liabilities | Liability Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Product Rebates | $477 | $465 | | Employee Compensation and Benefit Costs | $225 | $230 | | Product Returns | $76 | $88 | | Advertising and Promotion | $66 | $52 | | Discounts and Allowances | $59 | $64 | | Professional Fees | $52 | $59 | | Other | $408 | $351 | | Total Accrued and other current liabilities | $1,363 | $1,309 | 10. FINANCING ARRANGEMENTS A significant debt refinancing in June 2025 established new credit facilities and notes, resulting in a $9 million loss on extinguishment and an 8.06% weighted average interest rate - On June 26, 2025, Bausch + Lomb completed a refinancing, entering into a new $800 million June 2030 Revolving Credit Facility and a $2,325 million January 2031 Term Facility[99] - The company issued €675 million aggregate principal amount of Senior Secured Floating Rate Notes due January 2031, accruing interest at three-month EURIBOR plus 3.875%[111] | Debt Type | Maturity | Principal Amount (in millions) | Net of Issuance Costs (in millions) | | :-------------------------------- | :------------- | :----------------------------- | :---------------------------------- | | September 2028 Term Facility | September 2028 | $491 | $484 | | January 2031 Term Facility | January 2031 | $2,325 | $2,292 | | October 2028 Secured Notes | October 2028 | $1,400 | $1,385 | | January 2031 Secured Notes | January 2031 | $796 | $784 | | Other | Various | $12 | $14 | | Total long-term debt | | $5,024 | $4,959 | - A loss on extinguishment of debt of $9 million was incurred for the three and six months ended June 30, 2025, related to the June 2025 refinancing[119][266][298] - The weighted average stated rate of interest for outstanding debt obligations was 8.06% as of June 30, 2025, up from 7.95% at December 31, 2024[118][331] 11. SHARE-BASED COMPENSATION The Omnibus Incentive Plan authorizes 52 million common shares for awards, with expense increasing to $58 million for the six months ended June 30, 2025 - The Amended and Restated Plan authorizes an aggregate of 52,000,000 common shares for issuance, including stock options, RSUs, and PSUs[124] | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :----------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Stock options expense | $4 | $2 | $7 | $4 | | PSUs/RSUs expense | $26 | $20 | $51 | $37 | | Total Share-based compensation expense | $30 | $22 | $58 | $41 | - As of June 30, 2025, unrecognized compensation expenses for outstanding non-vested awards totaled $157 million, to be amortized over a weighted-average period of 1.65 years[128] 12. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss improved to $(1,191) million as of June 30, 2025, due to favorable foreign currency translation | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Foreign currency translation adjustment | $(1,164) | $(1,358) | | Pension adjustment, net of tax | $(27) | $(27) | | Total Accumulated other comprehensive loss | $(1,191) | $(1,385) | 13. OTHER EXPENSE, NET Other expense, net, increased to $44 million for the six months ended June 30, 2025, driven by restructuring and acquired R&D costs | Expense Category | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Restructuring, integration and separation costs | $31 | $6 | $32 | $17 | | Acquired in-process research and development costs | $1 | $3 | $29 | $3 | | Acquisition-related contingent consideration | $(18) | $0 | $(27) | $1 | | Total Other expense, net | $22 | $14 | $44 | $23 | - Acquired in-process research and development costs in 2025 primarily relate to the acquisition of Whitecap Biosciences[131][290] 14. INCOME TAXES A $58 million benefit from income taxes was recorded for the six months ended June 30, 2025, a significant improvement due to jurisdictional mix and discrete tax effects | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Benefit from (provision for) income taxes | $89 | $(72) | $58 | $(145) | - The favorable change in income taxes for the six months ended June 30, 2025, was primarily due to jurisdictional mix of earnings and discrete tax effects, including a benefit for previously accrued taxes that settled favorably with the IRS and the impact of the enVista IOL recall[133][300] - The valuation allowance against deferred tax assets increased to $204 million as of June 30, 2025, from $179 million at December 31, 2024, mainly due to losses in jurisdictions with full valuation allowances[134] 15. LOSS PER SHARE Basic and diluted loss per share improved for both periods ended June 30, 2025, with potential common shares excluded due to anti-dilutive effects | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss attributable to Bausch + Lomb Corporation (in millions) | $(62) | $(151) | $(274) | $(318) | | Basic and diluted loss per share | $(0.18) | $(0.43) | $(0.78) | $(0.90) | | Basic weighted-average common shares (in millions) | 353.7 | 351.8 | 353.3 | 351.5 | | Diluted weighted-average common shares (in millions) | 353.7 | 351.8 | 353.3 | 351.5 | - Approximately 16.6 million and 15.2 million potential common shares from RSUs, PSUs, and stock options were excluded from diluted EPS for the three and six months ended June 30, 2025, respectively, because their effect would have been anti-dilutive[139] 16. LEGAL PROCEEDINGS The company is involved in various legal proceedings, with $13 million accrued for current loss contingencies, and no material adverse effect expected - As of June 30, 2025, Bausch + Lomb's Condensed Consolidated Balance Sheets include accrued current loss contingencies of $13 million related to matters that are both probable and reasonably estimable[142] - The company is a defendant in multidistrict antitrust litigation regarding generic pharmaceutical pricing, with anticipated fee and damage splitting with BHC[144][146] - Product liability lawsuits related to Shower to Shower are ongoing, but Johnson & Johnson has indemnification obligations for potential liabilities and legal fees[147][152] - Intellectual property disputes include ongoing Paragraph IV proceedings against generic competitors for Lumify, Vyzulta, and Lotemax SM products[159][164] - The PreserVision AREDS patent litigation and the New Mexico Attorney General consumer protection action have been concluded or settled, with the latter resulting in a consent judgment dismissing the company[167][171] 17. SEGMENT INFORMATION Vision Care showed revenue and profit growth, while Pharmaceuticals and Surgical segments faced profit declines for the six months ended June 30, 2025 - The company's three reportable segments are Vision Care (contact lenses, consumer eye care), Pharmaceuticals (proprietary and generic eye medications), and Surgical (medical device equipment, IOLs, surgical instruments)[172][174] | Segment | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenues: | | | | | | Vision Care | $1,409 | $1,332 | $77 | 6% | | Pharmaceuticals | $576 | $577 | $(1) | 0% | | Surgical | $430 | $406 | $24 | 6% | | Segment Profit: | | | | | | Vision Care | $385 | $370 | $15 | 4% | | Pharmaceuticals | $48 | $131 | $(83) | -63% | | Surgical | $(5) | $15 | $(20) | -133% | - The top ten products/franchises accounted for 54% of total revenues for the six months ended June 30, 2025[179] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of Bausch + Lomb's financial condition and results of operations for the three and six months ended June 30, 2025 INTRODUCTION This MD&A introduction outlines its scope, forward-looking nature, and adherence to U.S. GAAP for interim financial reporting - The MD&A is updated through July 30, 2025, and should be read with the unaudited interim Condensed Consolidated Financial Statements[181] - All currency amounts are expressed in U.S. dollars and prepared in accordance with U.S. GAAP for interim financial reporting[182] OVERVIEW Bausch + Lomb is a leading global eye health company with a broad product portfolio, remaining a BHC subsidiary while BHC evaluates full separation - Bausch + Lomb is a leading global eye health company with a comprehensive portfolio of approximately 400 products, including contact lenses, IOLs, surgical systems, and prescription eye-medications[183] - BHC holds approximately 88% of Bausch + Lomb's common shares as of July 23, 2025[184] - BHC continues to evaluate the separation of Bausch + Lomb, which may involve a distribution, monetization, or sale, but there is no assurance that the separation will be consummated or that anticipated benefits will be realized[184] Reportable Segments Bausch + Lomb operates in three reportable segments: Vision Care, Pharmaceuticals, and Surgical, each with distinct product portfolios - Vision Care segment includes contact lenses (e.g., Bausch + Lomb INFUSE, Biotrue ONEday, ULTRA) and consumer eye care products (e.g., Biotrue, Renu, Lumify, PreserVision)[185][186] - Pharmaceuticals segment offers proprietary and generic products for various eye conditions, with key brands like MIEBO, XIIDRA, Vyzulta, and Lotemax[186] - Surgical segment provides medical device equipment, consumables, and technologies for eye conditions, including IOLs (e.g., enVista, Crystalens), phacoemulsification equipment (e.g., Stellaris Elite), and surgical instruments[186] Strategic Acquisitions and Licensing Agreements Strategic acquisitions in 2025 and 2024, including Whitecap Biosciences, Elios Vision, and Trukera Medical, expanded the eye health portfolio - In 2025, Bausch + Lomb acquired Whitecap Biosciences to expand its clinical-stage pipeline for glaucoma and geographic atrophy[188] - In 2024, the company acquired Elios Vision for its ELIOS procedure for glaucoma and Trukera Medical for its ScoutPro device, expanding its dry eye market presence[189] - Prior acquisitions include XIIDRA (2023) for dry eye disease, the Blink OTC product line (2023), and AcuFocus (2023) for the IC-8 Apthera™ IOL[189][190][191] Product Development Bausch + Lomb's R&D pipeline includes over 60 projects across Vision Care, Pharmaceuticals, and Surgical segments, focusing on new product launches and clinical studies - The R&D organization is advancing a global pipeline of over 60 projects, including new contact lenses for myopia, next-generation cataract equipment, premium IOLs, and treatments for dry eye[192] - Recent Vision Care developments include the launch of Lumify Preservative Free (Q1 2025), expansion of the Blink franchise with NutriTears (June 2024), and ongoing development of AREDS3 vitamins and myopia control contact lenses[196] - Pharmaceuticals segment anticipates initiating clinical studies in H2 2025 for dual-action lifitegrast (dry eye), ocular pain, and glaucoma neuroprotection[196][197] - Surgical segment pipeline includes the launch of enVista Aspire IOLs (U.S. Oct 2023, Europe Jan 2025) and enVista Envy (Canada June 2024), anticipated launch of enVista Beyond EDOF IOL (U.S. early 2027), European launch of LuxLife Trifocal IOL, and planned U.S. submission of ELIOS[198][207] Business Trends Key business trends include the enVista IOL recall, minimal impact from geopolitical conflicts, macroeconomic monitoring, and evaluation of tax and healthcare legislative changes - A voluntary recall of certain enVista IOL products was initiated in March 2025 due to an increased number of Toxic Anterior Segment Syndrome (TASS) reports[201] - The issue was traced to raw material from a different vendor, and enhanced inspection protocols have been implemented, with full production and resupply ongoing[202] - Revenues from Russia, Ukraine, and Belarus were approximately 3% of total revenues for the six months ended June 30, 2025, and the conflict has not had a material impact on operations to date[207] - Revenues from the Middle East conflict regions were less than 1% of total revenues for the six months ended June 30, 2025, with sales in Iran covered by an OFAC license[210] - The company is monitoring macroeconomic conditions, including tariffs and trade restrictions, and is exploring mitigation actions such as strategic inventory stocking, shifting manufacturing, and optimizing existing capacity[212][213] - The OECD's global minimum corporate tax rate (Pillar Two) is expected to have minimal impact on the 2025 tax rate, but future risks from changes in tax law are anticipated[219] - The One Big Beautiful Bill Act (OBBBA), signed in July 2025, retroactively extends and modifies certain Tax Cuts & Jobs Act provisions, with the company evaluating its effects on 2025 and future tax provisions[220] - The company faces generic competition and loss of exclusivity for products like Lumify, PreserVision, Vyzulta, and Lotemax SM, which it manages through patent defense and pipeline development[226][227] RESULTS OF OPERATIONS Results of operations for the three and six months ended June 30, 2025, show revenue growth, but declining operating income, influenced by segment performance, refinancing, and tax benefits Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 Revenues increased by 5%, but operating income declined, while net loss improved significantly due to a favorable change in income taxes | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenues | $1,278 | $1,216 | $62 | 5% | | Operating (loss) income | $(11) | $26 | $(37) | -142% | | Net loss attributable to Bausch + Lomb Corporation | $(62) | $(151) | $89 | 59% | | Basic and diluted loss per share | $(0.18) | $(0.43) | $0.25 | 58% | - Revenue increase was driven by $64 million from increased volumes (Vision Care, Pharmaceuticals), $21 million from favorable foreign currencies, and $6 million from acquisitions, partially offset by $27 million from decreased net realized pricing and $2 million from divestitures/discontinuations[232] | Segment | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Vision Care Revenue | $753 | $697 | $56 | 8% | | Pharmaceuticals Revenue | $309 | $310 | $(1) | 0% | | Surgical Revenue | $216 | $209 | $7 | 3% | | Vision Care Segment Profit | $209 | $192 | $17 | 9% | | Pharmaceuticals Segment Profit | $37 | $78 | $(41) | -53% | | Surgical Segment Profit | $2 | $4 | $(2) | -50% | - Cost of goods sold as a percentage of product sales increased to 41.1% from 39.7%, driven by product mix and the enVista IOL recall[249] - SG&A expenses increased by $44 million (8%) to $579 million, primarily due to higher selling and advertising/promotion costs for MIEBO[251] - R&D expenses increased by $12 million (14%) to $96 million, due to certain products in development[253] - Interest expense increased by $26 million to $128 million, primarily due to the write-off of financing costs from the June 2025 refinancing[265] Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 Revenues increased by 4%, but operating loss widened, while net loss improved due to a significant favorable change in income taxes | Metric | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenues | $2,415 | $2,315 | $100 | 4% | | Operating (loss) income | $(94) | $32 | $(126) | -394% | | Net loss attributable to Bausch + Lomb Corporation | $(274) | $(318) | $44 | 14% | | Basic and diluted loss per share | $(0.78) | $(0.90) | $0.12 | 13% | - Revenue increase was driven by $127 million from increased volumes, $12 million from acquisitions, and $2 million from favorable foreign currencies, partially offset by $38 million from decreased net realized pricing and $3 million from divestitures/discontinuations[272] | Segment | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | Change (%) | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Vision Care Revenue | $1,409 | $1,332 | $77 | 6% | | Pharmaceuticals Revenue | $576 | $577 | $(1) | 0% | | Surgical Revenue | $430 | $406 | $24 | 6% | | Vision Care Segment Profit | $385 | $370 | $15 | 4% | | Pharmaceuticals Segment Profit | $48 | $131 | $(83) | -63% | | Surgical Segment Profit | $(5) | $15 | $(20) | -133% | - Cost of goods sold as a percentage of product sales increased to 41.7% from 39.2%, driven by product mix and the enVista IOL recall, including an inventory reserve[285] - SG&A expenses increased by $103 million (10%) to $1,142 million, primarily due to higher selling and advertising/promotion costs for MIEBO and higher Business Transformation Costs[286] - R&D expenses increased by $16 million (10%) to $182 million, due to certain products in development[286] - Interest expense increased by $21 million to $222 million, primarily due to the write-off of financing costs from the June 2025 refinancing[297] LIQUIDITY AND CAPITAL RESOURCES Operating cash flow decreased significantly due to refinancing fees, while investing and financing activities saw notable changes, and the company completed a major debt refinancing in June 2025 | Cash Flow Activity | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (in millions) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | | Net cash provided by operating activities | $10 | $56 | $(46) | | Net cash used in investing activities | $(206) | $(131) | $(75) | | Net cash provided by financing activities | $121 | $52 | $69 | | Net decrease in cash and cash equivalents and restricted cash | $(44) | $(32) | $(12) | - The decrease in operating cash flow is primarily attributed to financing fees associated with the June 2025 refinancing[304] - Net cash used in investing activities increased due to higher purchases of property, plant and equipment[306] - The company completed a significant debt refinancing in June 2025, including a new $800 million revolving credit facility and a $2,325 million term B loan facility, and issued €675 million in Senior Secured Floating Rate Notes[314][326] - The weighted average stated rate of interest for outstanding debt obligations increased to 8.06% as of June 30, 2025, from 7.95% at December 31, 2024[331] - The company expects primary cash requirements for H2 2025 to include approximately $185 million for interest payments, $14 million for mandatory debt amortization, and $80 million for capital expenditures[341] OUTSTANDING SHARE DATA As of July 23, 2025, Bausch + Lomb had 353.9 million common shares outstanding, along with various equity awards - As of July 23, 2025, there were 353,865,790 common shares issued and outstanding[341] - Outstanding equity awards include approximately 10.3 million stock options, 7.6 million RSUs, and 5.2 million PSUs, with a maximum of 13.1 million common shares issuable upon PSU vesting[341][342] CRITICAL ACCOUNTING POLICIES AND ESTIMATES No significant changes were identified in critical accounting policies and estimates during the six months ended June 30, 2025 - No significant changes were identified in critical accounting policies and estimates during the six months ended June 30, 2025[343] NEW ACCOUNTING STANDARDS No new accounting standards were adopted during the six months ended June 30, 2025 - No new accounting standards were adopted during the six months ended June 30, 2025[344] FORWARD-LOOKING STATEMENTS This section provides cautionary statements regarding forward-looking information, highlighting various risks and uncertainties that could materially impact future results - Forward-looking statements relate to business strategy, product pipeline, financial performance, R&D spend, liquidity, debt compliance, tax impacts, litigation, and the anticipated separation from BHC[346] - Key risks include adverse economic conditions, the enVista IOL recall, trade policies and tariffs, uncertainties regarding the BHC separation, ongoing litigation, regulatory actions, and the ability to comply with debt covenants[348][349][350][351][352][353][354][355][356][357][358] - The company undertakes no obligation to update or revise forward-looking statements, except as required by law, and cautions that the list of factors affecting future results is not exhaustive[357] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's assessment of market risks, except for interest rate risk, have occurred since the Annual Report - No material changes to the company's assessment of market risks, except for interest rate risk, have occurred since the Annual Report[359] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective as of June 30, 2025[360] - No material changes in internal controls over financial reporting occurred during the three months ended June 30, 2025[362] Part II. Other Information This section provides other information, including legal proceedings, risk factors, equity sales, defaults, mine safety, and a list of exhibits Item 1. Legal Proceedings The company is involved in various legal proceedings, with $13 million accrued for current loss contingencies, and no material adverse effect expected - The company is involved in various legal proceedings, but based on current information and reserves, no material adverse effect on financial position, liquidity, or results of operations is expected[364] - Further details on legal proceedings are available in Note 16 of the unaudited interim Condensed Consolidated Financial Statements[365] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[366] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales or purchases of equity securities occurred during the three months ended June 30, 2025 - No unregistered sales of equity securities or purchases of equity securities by the company occurred during the three months ended June 30, 2025[367] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported - No defaults upon senior securities were reported[368] Item 4. Mine Safety Disclosures No mine safety disclosures were reported - No mine safety disclosures were reported[368] Item 5. Other Information No other information was reported - No other information was reported[368] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key debt agreements and certifications from the CEO and CFO - Key exhibits include the Indenture for the January 2031 Secured Notes and the Third Amendment to Credit and Guaranty Agreement, both filed in June 2025[370][374] - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included[370][374]