Bausch + Lomb (BLCO) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion for Q1 2024 Item 1. Financial Statements This section provides unaudited condensed consolidated financial statements and detailed notes for Q1 2024 and 2023 Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2024, and December 31, 2023 Condensed Consolidated Balance Sheets (in millions): | Metric | March 31, 2024 | December 31, 2023 | | :----- | :------------- | :---------------- | | Total Assets | $13,293 | $13,442 | | Total Liabilities | $6,564 | $6,522 | | Total Equity | $6,729 | $6,920 | Condensed Consolidated Statements of Operations Details the company's revenues, operating income, and net loss for the three months ended March 31, 2024, and 2023 Condensed Consolidated Statements of Operations (in millions, except per share amounts): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Revenues | $1,099 | $931 | | Operating Income (Loss) | $6 | $(2) | | Net Loss | $(163) | $(88) | | Net Loss Attributable to Bausch + Lomb Corporation | $(167) | $(90) | | Basic and Diluted Loss Per Share | $(0.48) | $(0.26) | Condensed Consolidated Statements of Comprehensive Loss Reports the net loss and other comprehensive loss components for the three months ended March 31, 2024, and 2023 Condensed Consolidated Statements of Comprehensive Loss (in millions): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Net Loss | $(163) | $(88) | | Other Comprehensive Loss (Income) | $(42) | $19 | | Comprehensive Loss | $(205) | $(69) | | Comprehensive Loss Attributable to Bausch + Lomb Corporation | $(205) | $(70) | Condensed Consolidated Statements of Shareholders' Equity Outlines changes in shareholders' equity, including net loss and other comprehensive loss, for Q1 2024 Condensed Consolidated Statements of Shareholders' Equity (in millions): | Metric | March 31, 2024 | January 1, 2024 | | :----- | :------------- | :-------------- | | Balances, Beginning of Period | $6,920 | $6,920 | | Net Loss | $(163) | $(254) | | Other Comprehensive Loss | $(42) | $(1,245) | | Balances, End of Period | $6,729 | $6,850 | Condensed Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities for the three months ended March 31, 2024, and 2023 Condensed Consolidated Statements of Cash Flows (in millions): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Net Cash Provided by (Used in) Operating Activities | $41 | $(56) | | Net Cash Used in Investing Activities | $(57) | $(64) | | Net Cash Provided by Financing Activities | $12 | $91 | | Net Decrease in Cash and Cash Equivalents and Restricted Cash | $(9) | $(22) | | Cash and Cash Equivalents and Restricted Cash, End of Period | $325 | $358 | Notes to the Condensed Consolidated Financial Statements Provides detailed explanations of significant accounting policies and financial statement line items 1. Description of Business Describes Bausch + Lomb's global eye health operations and its relationship with Bausch Health Companies Inc - Bausch + Lomb is a global eye health company operating in three segments: Vision Care, Pharmaceuticals, and Surgical. Bausch Health Companies Inc. (BHC) holds approximately 88.3% of Bausch + Lomb's common shares as of April 24, 2024[59][61] - The full separation of Bausch + Lomb from BHC, including the distribution of BHC's remaining equity interest, is subject to achieving targeted debt leverage ratios and necessary approvals[62] 2. Significant Accounting Policies Details the accounting principles and estimates used in preparing the interim financial statements - The unaudited Condensed Consolidated Financial Statements are prepared in U.S. dollars, in accordance with U.S. GAAP for interim financial reporting, and consistent with policies from the 2023 Annual Report on Form 10-K[63] - Management's estimates and assumptions, particularly regarding global macroeconomic conditions like inflation and supply chain, are crucial for financial reporting, and are regularly reviewed for reasonableness[67][68][69][70] - No new accounting standards were adopted in Q1 2024. However, ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) are effective for future fiscal years, and the Company is evaluating their impact[71][73][74] 3. Revenue Recognition Explains the company's policies for recognizing revenue from product sales and other services - Revenue is primarily generated from product sales in eye health, including branded/generic pharmaceuticals, OTC products, and medical devices. Other revenues include alliance and service revenue[75] - Product sales revenue is recognized when the customer obtains control of goods, generally upon shipment or receipt. Surgical equipment revenue is recognized upon delivery and installation, while IOLs are recognized upon notification of use[77][78] Variable Consideration Provisions (in millions): | Category | March 31, 2024 | January 1, 2024 | Change | | :------- | :------------- | :-------------- | :----- | | Discounts and Allowances | $131 | $141 | $(10) | | Returns | $71 | $66 | $5 | | Rebates | $346 | $226 | $120 | | Chargebacks | $74 | $67 | $7 | | Distribution Fees | $27 | $18 | $9 | | Total | $649 | $518 | $131 | - The allowance for credit losses for trade receivables remained stable at $21 million for both March 31, 2024, and March 31, 2023[88] 4. Related Parties Discloses transactions and agreements with Bausch Health Companies Inc. and its affiliates - Bausch + Lomb is a subsidiary of BHC, which holds approximately 88.3% of its common shares. Transactions with BHC and affiliates are cash-settled and reflected in the balance sheets[89][91] Related Party Balances (in millions): | Metric | March 31, 2024 | December 31, 2023 | | :----- | :------------- | :---------------- | | Amounts Payable to BHC and Affiliates | $51 | $43 | | Amounts Due From BHC and Affiliates | $59 | $55 | - Key separation agreements with BHC include the Master Separation Agreement (MSA), Transition Services Agreement (TSA), Tax Matters Agreement, and Employee Matters Agreement, governing the ongoing relationship and services[92][94][96][97] - Charges related to these agreements were $1 million for both Q1 2024 and Q1 2023, primarily impacting Selling, General and Administrative (SG&A) expenses[98] 5. Acquisitions and Licensing Agreements Summarizes recent strategic acquisitions and licensing deals, including XIIDRA and Blink - The XIIDRA Acquisition was consummated on September 29, 2023, for an upfront cash payment of $1,750 million, with contingent consideration liabilities of $34 million recognized. The valuation of acquired assets and liabilities is not yet finalized[105][100] - The Blink product line of eye and contact lens drops was acquired on July 6, 2023, for an upfront cash payment of $107 million, enhancing the global over-the-counter business[106] - AcuFocus, Inc. was acquired on January 17, 2023, for an upfront payment of $35 million, with potential future contingent payments based on sales milestones, bolstering the Surgical segment's IOL offerings[109] 6. Fair Value Measurements Explains the methodologies and categorization of assets and liabilities measured at fair value - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 prices), and Level 3 (unobservable inputs requiring significant judgment)[110][111] Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions): | Item | March 31, 2024 (Carrying Value) | December 31, 2023 (Carrying Value) | | :--- | :------------------------------ | :--------------------------------- | | Cash equivalents | $67 | $44 | | Foreign currency exchange contracts (Asset) | $1 | $1 | | Acquisition-related contingent consideration (Liability) | $45 | $44 | | Foreign currency exchange contracts (Liability) | $1 | $4 | | Cross-currency swaps (Liability) | $68 | $84 | - Cross-currency swaps, with an aggregate notional value of $1,000 million as of March 31, 2024, are used to mitigate fluctuations in the value of euro-denominated net investments[115] - Acquisition-related contingent consideration obligations are Level 3 measurements, determined by probability-weighted discounted cash flow analysis using risk-adjusted discount rates ranging from 11% to 28% at March 31, 2024[118][120][121] - The fair value of long-term debt was $4,672 million as of March 31, 2024, estimated using Level 2 inputs (quoted market prices for similar debt issuances)[123] 7. Inventories Provides a breakdown of inventory components, including raw materials, work in process, and finished goods Inventories, net (in millions): | Component | March 31, 2024 | December 31, 2023 | | :-------- | :------------- | :---------------- | | Raw materials | $270 | $261 | | Work in process | $96 | $100 | | Finished goods | $707 | $667 | | Total | $1,073 | $1,028 | 8. Intangible Assets and Goodwill Details the company's intangible assets and goodwill by segment, along with impairment testing Intangible Assets, Net (in millions): | Category | March 31, 2024 | December 31, 2023 | | :------- | :------------- | :---------------- | | Total finite-lived intangible assets | $1,812 | $1,886 | | Acquired in-process R&D intangible asset | $5 | $5 | | B&L Trademark | $1,698 | $1,698 | | Total | $3,515 | $3,589 | Goodwill by Segment (in millions): | Segment | March 31, 2024 | December 31, 2023 | | :------ | :------------- | :---------------- | | Vision Care | $3,548 | $3,556 | | Pharmaceuticals | $675 | $693 | | Surgical | $324 | $326 | | Total Goodwill | $4,547 | $4,575 | - The Company conducted its annual goodwill impairment test as of October 1, 2023, and found no impairment, with the fair value of each reporting unit exceeding its carrying value by more than 25%. No events indicated impairment during Q1 2024[125][126][127] 9. Accrued and Other Current Liabilities Lists the components of accrued and other current liabilities as of March 31, 2024, and December 31, 2023 Accrued and Other Current Liabilities (in millions): | Component | March 31, 2024 | December 31, 2023 | | :-------- | :------------- | :---------------- | | Product rebates | $313 | $191 | | Employee compensation and benefit costs | $189 | $233 | | Discounts and allowances | $84 | $84 | | Product returns | $66 | $66 | | Interest | $44 | $44 | | Advertising and Promotion | $45 | $45 | | Other | $377 | $364 | | Total | $1,161 | $1,027 | 10. Financing Arrangements Describes the company's debt obligations, credit facilities, and compliance with financial covenants Principal Amounts of Debt Obligations (in millions): | Debt Type | Maturity | March 31, 2024 (Principal) | December 31, 2023 (Principal) | | :-------- | :------- | :------------------------- | :---------------------------- | | Revolving Credit Facility | May 2027 | $300 | $275 | | May 2027 Term Facility | May 2027 | $2,456 | $2,462 | | September 2028 Term Facility | September 2028 | $498 | $499 | | 8.375% Senior Secured Notes | October 2028 | $1,400 | $1,400 | | Total Long-term Debt | | $4,654 | $4,636 | - The Company's Senior Secured Credit Facilities include a May 2027 Term Facility ($2,456M outstanding), a September 2028 Term Facility ($498M outstanding), and a Revolving Credit Facility ($300M outstanding with $174M availability)[135] - The October 2028 Secured Notes, totaling $1,400 million at 8.375% interest, were issued to finance the XIIDRA Acquisition. These notes are secured by the same first priority liens as the Amended Credit Agreement[145][146] - The weighted average stated interest rate for outstanding debt was 8.62% at March 31, 2024, slightly down from 8.65% at December 31, 2023[152] - The Company was in compliance with all financial covenants related to its debt obligations as of March 31, 2024, and expects to remain compliant for the next twelve months[175] 11. Share-Based Compensation Details the company's share-based incentive plans and related compensation expenses - The Bausch + Lomb 2022 Omnibus Incentive Plan authorizes 38,000,000 common shares for issuance, with an additional 14,000,000 shares proposed for shareholder approval[156][178] - A Performance Share Unit (PSU) award was approved for key senior leaders, designed to reward significant outperformance of revenue and relative total shareholder return (TSR) goals, vesting in February 2027[157][180] Share-based Compensation Expense (in millions): | Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------- | :-------------------------------- | :-------------------------------- | | Stock options | $2 | $4 | | PSUs/RSUs | $17 | $20 | | Total | $19 | $24 | - As of March 31, 2024, unrecognized compensation expenses totaled $176 million, to be amortized over a weighted-average period of 2.37 years[186] 12. Accumulated Other Comprehensive Loss Presents the components of accumulated other comprehensive loss, primarily foreign currency translation adjustments Accumulated Other Comprehensive Loss (in millions): | Component | March 31, 2024 | December 31, 2023 | | :-------- | :------------- | :---------------- | | Foreign currency translation adjustment | $(1,254) | $(1,217) | | Pension adjustment, net of tax | $(29) | $(28) | | Total | $(1,283) | $(1,245) | 13. Research and Development Reports the company's research and development expenditures for product development and quality assurance Research and Development Costs (in millions): | Component | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------- | :-------------------------------- | :-------------------------------- | | Product related research and development | $79 | $72 | | Quality assurance | $3 | $5 | | Total | $82 | $77 | 14. Other Expense, Net Details various other expenses, including restructuring, integration, and litigation costs Other Expense, Net (in millions): | Component | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------- | :-------------------------------- | :-------------------------------- | | Restructuring, integration and separation costs | $11 | $8 | | Gain on sale of assets | $(4) | $0 | | Litigation and other matters | $1 | $0 | | Acquisition-related costs | $0 | $1 | | Acquisition-related contingent consideration | $1 | $0 | | Total | $9 | $9 | - Restructuring and integration costs, primarily employee severance, increased to $11 million in Q1 2024 from $8 million in Q1 2023, reflecting ongoing cost savings programs[190] 15. Income Taxes Explains the provision for income taxes, valuation allowances, and unrecognized tax benefits Provision for Income Taxes (in millions): | Period | Provision for Income Taxes | | :----- | :------------------------- | | Three Months Ended March 31, 2024 | $73 | | Three Months Ended March 31, 2023 | $33 | - The increase in income tax provision from $33 million in Q1 2023 to $73 million in Q1 2024 was primarily due to changes in the jurisdictional mix of earnings and discrete tax effects from tax return filings and stock compensation deductions[192] - The valuation allowance against deferred tax assets increased to $161 million at March 31, 2024, from $150 million at December 31, 2023, due to losses in jurisdictions with full valuation allowances[193] - Unrecognized tax benefits totaled $67 million at March 31, 2024, with $59 million potentially reducing the effective tax rate if recognized. A $2 million decrease is reasonably possible in the next 12 months[196] 16. Loss Per Share Provides the calculation of basic and diluted loss per share attributable to Bausch + Lomb Corporation Loss Per Share Attributable to Bausch + Lomb Corporation: | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | :-------------------------------- | | Net Loss (in millions) | $(167) | $(90) | | Basic and Diluted Weighted-Average Common Shares Outstanding (in millions) | 351.1 | 350.0 | | Basic and Diluted Loss Per Share | $(0.48) | $(0.26) | - All potential common shares from RSUs, performance-based RSUs, and stock options were excluded from diluted loss per share calculations for both periods as their inclusion would have been anti-dilutive[199][200][201] 17. Legal Proceedings Outlines the company's involvement in various legal and administrative proceedings - Bausch + Lomb is involved in various legal and administrative proceedings, including product liability, intellectual property, commercial, tax, and antitrust matters. Accrued current loss contingencies were $4 million as of March 31, 2024[202][203] - The Company is a defendant in multidistrict antitrust litigation regarding generic pharmaceuticals pricing and a proposed Canadian class action with similar allegations, which it intends to vigorously defend[205][206][207] - Product liability lawsuits related to Shower to Shower® are ongoing, but BHC and Bausch + Lomb maintain full indemnification claims and rights against Johnson & Johnson and LTL Management, LLC[214][217] - Intellectual property matters include ongoing patent infringement proceedings for PreserVision® AREDS and Lumify® (brimonidine tartrate solution) drops, which the Company is vigorously defending[227][228][231] 18. Segment Information Presents financial data by reportable segment (Vision Care, Pharmaceuticals, Surgical) and geographic region - The Company operates in three reportable segments: Vision Care (contact lenses, consumer eye care), Pharmaceuticals (proprietary and generic eye medications), and Surgical (medical device equipment, consumables, and technologies for eye conditions)[232][233][234][235] Segment Revenues and Profit (in millions): | Segment | Q1 2024 Revenues | Q1 2023 Revenues | Q1 2024 Profit | Q1 2023 Profit | | :------ | :--------------- | :--------------- | :------------- | :------------- | | Vision Care | $635 | $587 | $178 | $154 | | Pharmaceuticals | $267 | $161 | $53 | $46 | | Surgical | $197 | $183 | $11 | $11 | | Total | $1,099 | $931 | $242 | $211 | Geographic Revenues (in millions): | Region | Q1 2024 | Q1 2023 | | :----- | :------ | :------ | | U.S. and Puerto Rico | $537 | $404 | | China | $77 | $74 | | France | $60 | $56 | | Japan | $42 | $48 | | Germany | $42 | $42 | | United Kingdom | $31 | $29 | | Canada | $28 | $26 | | Russia | $28 | $24 | | Italy | $23 | $20 | | Spain | $21 | $20 | | Mexico | $17 | $16 | | Poland | $15 | $12 | | South Korea | $12 | $11 | | Other | $166 | $149 | | Total | $1,099 | $931 | - McKesson Corporation accounted for 11% of total revenues for the three months ended March 31, 2024, making it a major customer[242] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of financial performance, business trends, and liquidity for Q1 2024 Overview Provides a high-level summary of Bausch + Lomb's global eye health business and its relationship with BHC - Bausch + Lomb is a global eye health company with a comprehensive portfolio of over 400 products across Vision Care, Pharmaceuticals, and Surgical segments, marketed in approximately 100 countries[246][247] - BHC holds approximately 88.3% of Bausch + Lomb's common shares. The full separation from BHC is contingent on achieving targeted debt leverage ratios and necessary approvals[250] Product Development Highlights the company's R&D efforts and key pipeline products in various stages of development - The Company's R&D team of approximately 850 employees is focused on advancing a pipeline of over 60 global projects, including new contact lenses, cataract equipment, premium IOLs, and dry eye treatments[162] - Key near-term pipeline products include SiHy Daily contact lenses (launched in ~50 countries), Lumify® eye drops (new line extensions and preservative-free formulation approved), Blink NutriTears™ (nutritional supplement for dry eyes, Q3 2024 launch), MIEBO® (FDA-approved dry eye treatment, launched Sept 2023), and LuxLife®/enVista® premium IOLs (various launches planned through 2026)[256][257][258] Strategic Acquisitions and Licensing Agreements Discusses recent acquisitions like XIIDRA, Blink, and AcuFocus, aimed at portfolio expansion - Recent strategic acquisitions include XIIDRA® (dry eye treatment, Sept 2023), Blink® Product Line (OTC eye/contact lens drops, July 2023), and AcuFocus (small aperture intraocular technology, Jan 2023), all aimed at bolstering the product portfolio and driving growth[164][259] Business Trends Addresses external factors impacting the business, including geopolitical conflicts, supply chain, and healthcare reforms - The Russia-Ukraine War and related sanctions have not materially impacted operations, with revenues from Russia, Ukraine, and Belarus collectively representing approximately 3% of total revenues. Licenses have been obtained to resume sales of sanctioned products[266][263] - The Israel-Hamas conflict has had a minimal impact, with revenues from Israel and Iran less than 1% of total revenues[268] - Supply chain challenges have been mitigated through strategic inventory buying and multiple sourcing, though these actions have led to higher inventory costs and pressure on surgical margins[269] - The OECD/G20 global minimum corporate tax rate (Pillar Two) is expected to have minimal impact on the 2024 tax rate, but there is a future risk of increasing the overall effective tax rate[272] - Health care reforms and cost containment efforts globally continue to exert pricing pressures on product sales and reimbursements. The Company actively manages generic competition risks through patent defense and pipeline development[273][274][287] - Prolensa® began facing loss of exclusivity (LOE) in Q4 2023, accounting for ~1% of 2023 revenues. The PreserVision® U.S. formulation patent expired in March 2021, but a method-of-use patent remains until 2026[285][277] Results of Operations Analyzes the company's revenues, expenses, and net loss for the three months ended March 31, 2024 Key Financial Results (in millions): | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (Amount) | Change (%) | | :----- | :-------------------------------- | :-------------------------------- | :-------------- | :--------- | | Revenues | $1,099 | $931 | $168 | 18% | | Operating Income (Loss) | $6 | $(2) | $8 | N/A | | Net Loss Attributable to Bausch + Lomb Corporation | $(167) | $(90) | $(77) | 86% | | Interest Expense | $(99) | $(50) | $(49) | 98% | | Provision for Income Taxes | $(73) | $(33) | $(40) | 121% | - Total revenues increased by $168 million (18%) to $1,099 million, driven by $88 million from acquisitions (primarily XIIDRA®), $70 million from increased volumes, and $32 million from net realized pricing, partially offset by $20 million unfavorable foreign currency impact[290] Segment Revenue Growth (Constant Currency, Non-GAAP): | Segment | Q1 2024 Revenue (Reported) | Changes in Exchange Rates | Q1 2024 Constant Currency Revenue | Q1 2023 Revenue (Reported) | Change in Constant Currency Revenue | Pct. Change | | :------ | :------------------------- | :------------------------ | :-------------------------------- | :------------------------- | :---------------------------------- | :---------- | | Vision Care | $635 | $18 | $653 | $587 | $66 | 11% | | Pharmaceuticals | $267 | $1 | $268 | $161 | $107 | 66% | | Surgical | $197 | $1 | $198 | $183 | $15 | 8% | | Total | $1,099 | $20 | $1,119 | $931 | $188 | 20% | - Vision Care revenue increased by 8% to $635 million, driven by Lumify®, PreserVision®, dry eye portfolio, and SiHy Daily lenses, with a $36 million increase in net pricing and $22 million in volumes[297] - Pharmaceuticals revenue surged by 66% to $267 million, primarily due to $79 million from the XIIDRA® Acquisition and $38 million from MIEBO® launch and generic product demand[298] - Surgical segment revenue increased by 8% to $197 million, driven by increased demand for consumables, implantables (premium IOLs), and system sales[173] - Total provisions to reduce gross product sales to net product sales increased to 36.7% of gross sales in Q1 2024 from 27.4% in Q1 2023, mainly due to higher rebates from XIIDRA® and MIEBO®[302] - Cost of goods sold increased by $52 million (14%) to $423 million, primarily due to costs from recent acquisitions and higher volumes. As a percentage of product sales, it decreased from 40.0% to 38.7%[304][305] - SG&A expenses rose by $86 million (21%) to $504 million, mainly driven by increased selling, advertising, and promotion costs for XIIDRA® and MIEBO®[307] - R&D expenses increased by $5 million (6%) to $82 million, attributed to certain products in development[309] - Amortization of intangible assets increased by $17 million (30%) to $74 million, primarily due to assets acquired through recent acquisitions[311] - Operating income improved to $6 million in Q1 2024 from an operating loss of $2 million in Q1 2023, reflecting increased contribution partially offset by higher SG&A[314] - Interest expense increased by $49 million to $99 million, mainly due to new debt from the October 2028 Secured Notes and September 2028 Term Facility, and increased interest on the May 2027 Term Facility[324] - Net loss attributable to Bausch + Lomb Corporation increased by $77 million to $167 million, primarily due to higher interest expense ($49 million) and increased income tax provision ($40 million), partially offset by improved operating results ($8 million)[328][329] Liquidity and Capital Resources Discusses the company's cash flows, debt obligations, and ability to meet future financial commitments Cash Flow Summary (in millions): | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by (used in) operating activities | $41 | $(56) | $97 | | Net cash used in investing activities | $(57) | $(64) | $7 | | Net cash provided by financing activities | $12 | $91 | $(79) | | Net decrease in cash and cash equivalents and restricted cash | $(9) | $(22) | $13 | | Cash and cash equivalents and restricted cash, end of period | $325 | $358 | $(33) | - Operating activities generated $41 million in cash in Q1 2024, a $97 million improvement from Q1 2023, driven by net earnings (excluding non-cash items) and changes in operating assets/liabilities from the XIIDRA® Acquisition[332][333] - Investing activities used $57 million, a $7 million decrease from Q1 2023, primarily due to increased property, plant, and equipment purchases, partially offset by the AcuFocus acquisition in 2023[335] - Financing activities provided $12 million, a $79 million decrease from Q1 2023, mainly due to lower borrowings and higher repayments under the Revolving Credit Facility[336] - Primary liquidity sources include cash, customer collections, the Revolving Credit Facility, and potential debt/equity issuances. The Company expects these to meet liquidity needs for the next 12 months[337] - The weighted average stated interest rate for outstanding debt was 8.62% at March 31, 2024. Moody's changed its outlook to stable on April 22, 2024[357][358] - Expected cash requirements for April 1, 2024, through December 31, 2024, include approximately $300 million for interest payments, $23 million for mandatory debt amortization, and $185 million for capital expenditures[365] - The Company is implementing 'Business Transformation Costs' initiatives to streamline operations and may pursue further cost savings programs, including headcount reductions and facility rationalization[369][370] Outstanding Share Data Provides information on the number of common shares, stock options, and restricted share units outstanding - As of April 24, 2024, the Company had 351,482,100 issued and outstanding common shares. Additionally, there were approximately 9.3 million stock options, 7.6 million restricted share units, and 4.1 million performance-based restricted share units outstanding, with a maximum potential issuance of 10.8 million common shares from performance-based units[374] Critical Accounting Policies and Estimates Confirms no significant changes to critical accounting policies and estimates in Q1 2024 - Management reassessed critical accounting policies and estimates and determined there were no significant changes during the three months ended March 31, 2024[375] New Accounting Standards States that no new accounting standards were adopted during the first quarter of 2024 - There were no new accounting standards adopted during the three months ended March 31, 2024[376] Forward-Looking Statements Contains cautionary statements regarding future business strategy, financial performance, and associated risks - This section contains forward-looking statements regarding business strategy, product pipeline, financial performance, R&D and marketing spend, liquidity, debt compliance, and the anticipated separation from BHC. These statements involve risks and uncertainties, and actual results may differ materially[377][378][380] - Key risks include adverse economic conditions, challenges from the B+L IPO and proposed BHC separation, ongoing litigation, pricing decisions, regulatory oversight, debt covenants, credit rating downgrades, and uncertainties related to new product acquisitions and launches[380][383][387] - Other significant risks encompass international operations, geopolitical conflicts (Russia-Ukraine, Israel-Hamas), intellectual property protection, generic competition, supply chain disruptions, and the impact of health care reforms and global minimum corporate tax rates[35][39][101][102] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the Company's assessment of its sensitivity to market risks compared to the disclosures in its Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to the Company's assessment of market risks were identified during the three months ended March 31, 2024, compared to the Annual Report on Form 10-K[398] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of March 31, 2024, and reports no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024[399] - There were no material changes in the Company's internal controls over financial reporting during the three months ended March 31, 2024[4] PART II. OTHER INFORMATION Presents additional information not covered in the financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings Details the company's ongoing legal and administrative proceedings, with reference to Note 17 - The Company is involved in legal proceedings in the ordinary course of business, but based on current information, no material adverse effect on financial position, liquidity, or results of operations is expected[7] - Further information on legal proceedings can be found in Note 17, 'LEGAL PROCEEDINGS' of the unaudited interim Condensed Consolidated Financial Statements[8] Item 1A. Risk Factors There have been 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, 2023 - No material changes to the risk factors were disclosed in Item 1A. 'Risk Factors' from the Annual Report on Form 10-K for the year ended December 31, 2023[9] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not engage in any unregistered sales or purchases of its equity securities during the three months ended March 31, 2024 - There were no unregistered sales of equity securities or purchases of the Company's equity securities during the three months ended March 31, 2024[10] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - No defaults upon senior securities occurred during the period[10] Item 4. Mine Safety Disclosures The Company reported no mine safety disclosures - No mine safety disclosures were reported[10] Item 5. Other Information The Company reported no other information for this item - No other information was reported for this item[10] Item 6. Exhibits Lists all supplementary documents filed with the quarterly report, including corporate governance and certification documents - Exhibits include amended articles and by-laws, employment agreements for key executives, various forms of share unit award agreements under the 2022 Omnibus Incentive Plan, and certifications from the CEO and CFO (Sarbanes-Oxley Act)[12][19] - The filing also includes Inline XBRL documents (Instance, Schema, Calculation, Label, Presentation, Definition Linkbase Documents) and the Cover Page Interactive Data File[12][19] SIGNATURES Confirms the official signing of the report by the Chairman/CEO and CFO on May 1, 2024 - The report was signed on May 1, 2024, by Brenton L. Saunders, Chairman of the Board and Chief Executive Officer, and Sam Eldessouky, Executive Vice President and Chief Financial Officer[15]