Through the spinoff of our eye health business, Bausch Health (“the Company”) aims to unlock value across its two attractive businesses as soon as possible while creating two highly attractive, but dissimilar businesses:

  • Bausch + Lomb – A fully integrated, pure play eye health company built on the iconic Bausch + Lomb brand and long history of innovation; and
  • Bausch Pharma – A diversified pharmaceutical company with leading positions in gastroenterology, aesthetics/dermatology, neurology and international pharmaceutical
 

updated June 29, 2021

 
  • Why has Bausch Health decided to spin off its eye health business?
    We believe that by spinning off Bausch + Lomb, we can unlock value by creating two companies focused on what they each do best. We believe that the benefits of separating these attractive, but disparate businesses include improved strategic focus and enhanced financial transparency to better enable stakeholders to value each business independently.
  • How will the Company’s existing businesses be split?
    Bausch + Lomb will consist of the Company’s global vision care, global surgical, global consumer and global ophthalmic Rx businesses. Bausch Pharma4 will comprise a diversified portfolio of leading durable brands across gastroenterology, aesthetics/dermatology, neurology and international pharmaceuticals.
  • Can you provide any detail on the new businesses that will be created through this spinoff?
    Bausch + Lomb would have had 2019 pro forma revenue of approximately $3.7 billion.1,2 Core products include established durable eye care brands, including BAUSCH + LOMB ULTRA®, Biotrue® ONEday, LUMIFY®, Ocuvite® and PreserVision®, among others, as well as the recent launch of our SiHy daily contact lenses, which are known as BAUSCH + LOMB INFUSE™ in the United States.

    Bausch Pharma would have had 2019 pro forma revenue of approximately $4.9 billion.1,2 Core products include XIFAXAN®, TRULANCE® and RELISTOR® for gastrointestinal diseases; JUBLIA®, DUOBRII® and the Thermage® franchise for dermatologic conditions; and WELLBUTRIN® and APLENZIN® for neurological conditions, and ARTELAC® for international pharmaceuticals.
  • When is the spinoff expected to be completed?
    The Company continues to make progress on its plans to accomplish the spinoff on the earliest possible date, with the timing and structure of the anticipated spinoff tied to several important external actions, approvals, and conditions, and desired leverage. As a first step to preparing stand-alone carve-out financial statements, Bausch Health began to report Bausch + Lomb as a separate segment beginning with its 1Q 2021 results. It is our expectation to be operationally ready by 3Q 2021. (See slides 27 and 28 of our 1Q 2021 earnings).

    Additional details can be found in our company update presented at the Morgan Stanley Global Healthcare Conference on Sept. 16, 2020. The presentation can be found here: Bausch Health Update on Sept. 16, 2020.
  • What will the management teams look like for each company?
    Putting the right leadership team in place for each company is crucial to our collective success. Following the spinoff, we expect each company will be led by a highly experienced, tenured management team. In May 2021, we announced that Bausch Health’s Joseph Papa and Sam Eldessouky would lead Bausch + Lomb as chief executive officer (CEO) and chief financial officer, respectively.

    In August 2021, we announced that Thomas Appio will serve as CEO of Bausch Pharma2 effective upon separation of the Bausch + Lomb eye health business. Mr. Appio joined the company from Bausch + Lomb in 2013. Additionally, Robert Spurr has been appointed president of the U.S. market for Bausch Pharma effective upon separation of the Bausch + Lomb eye health business. Mr. Spurr currently serves as president of the Salix Pharmaceuticals business.
  • How will Bausch + Lomb be structured? Will there be other changes to the structure of Bausch Pharma?
    Many of the applicable considerations, approvals and conditions will influence and drive the ultimate structure of the transaction, and we will provide additional information concerning the structure of the spinoff as this process unfolds.
  • What will be the tax implications of the spinoff?
    Our goal is to structure the spinoff in a manner that is tax efficient for shareholders and compares favorably to peer companies. The tax rate for Bausch Pharma is expected to be approximately 10-12%. For Bausch + Lomb, the tax rate is expected to be a few hundred basis points higher than Bausch Pharma.
  • How will the companies be levered?
    At the time of our spin, we are currently anticipating that Bausch + Lomb net leverage will be approximately 2.5X3 its trailing 12-month adjusted EBITDA and for Bausch Pharma's net leverage to be approximately 6.5 to 6.7X3 its trailing 12-month adjusted EBITDA.
  • Where will the companies be located?
    Both companies will be domiciled in Canada; corporate offices will continue to be in Bridgewater, N.J.
  • Where will the companies be listed?
    We intend to list both companies on the New York (NYSE) and Toronto (TSX) exchanges.

1Numbers currently under review and subject to change.

2Estimated ~$110 million to shift from Bausch Pharma to Bausch + Lomb, mainly driven by product shifts from Generics to Global Ophtho Rx.

3Adjusted EBITDA is a non-GAAP financial measure. The Company does not provide reconciliations of projected Adjusted EBITDA (non-GAAP) to projected GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. In periods where significant acquisitions or divestitures are not expected, the Company believes it might have a basis for forecasting the GAAP equivalent for certain costs, such as amortization, that would otherwise be treated as a non-GAAP adjustment to calculate projected GAAP net income (loss). However, because other deductions (e.g., restructuring, gain or loss on extinguishment of debt and litigation and other matters) used to calculate projected net income (loss) may vary significantly based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amounts of these deductions may be material and, therefore, could result in GAAP net income (loss) being materially different from (including materially less than) projected Adjusted EBITDA (non-GAAP).

4Bausch Health ex B+L is referred to as “Bausch Pharma” and will assume a new name upon the separation of the Company’s eye health business, Bausch + Lomb.

 

Forward-Looking Statements

This web page contains forward-looking information and statements, within the meaning of applicable securities laws (collectively, “forward-looking statements”), including, but not limited to, statements regarding the Company’s plan to spin off its eye health business and the anticipated benefits of such transaction, the anticipated capitalization structure of Bausch + Lomb and the Company following completion of the spinoff transaction and the timing thereof, the targeted leverage for Bausch + Lomb and the Company and the timing and ability to achieve that targeted leverage, the anticipated dis-synergies resulting from such spinoff (including the anticipated allocation between Bausch + Lomb and the Company), the structure and means of effecting the proposed spinoff transaction (including the structure and timing of any potential IPO of a portion of Bausch + Lomb in connection with the proposed transaction), the anticipated business units of the Bausch + Lomb company following the spinoff transaction and the anticipated geographic and product/franchise mix among such units and the anticipated timing of completion of the various internal, organizational and other steps in the spinoff transaction. Forward-looking statements may generally be identified by the use of the words “anticipates,” “expects,” “predicts,” “goals,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” “target,” “commit,” “forecast,” “tracking,” or “continue” and variations or similar expressions, and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken or will occur or result, and similar such expressions also identify forward-looking information. These forward-looking statements are based upon the current expectations and beliefs of management and are provided for the purpose of providing additional information about such expectations and beliefs and readers are cautioned that these statements may not be appropriate for other purposes. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results and events to differ materially from those described in these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties discussed in the Company’s most recent annual and quarterly reports and detailed from time to time in the Company’s other filings with the Securities and Exchange Commission and the Canadian Securities Administrators, which risks and uncertainties are incorporated herein by reference. They also include, but are not limited to, risks and uncertainties relating to the Company’s proposed plan to spin off its eye health business, including the expected benefits and costs of the spinoff transaction, the expected timing of completion of the spinoff transaction and its terms, the Company’s ability to complete the spinoff transaction considering the various conditions to the completion of the spinoff 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 spinoff transaction, diversion of management time on the spinoff transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the spinoff transaction, the qualification of the spinoff 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 dis-synergy costs between the spun off entity and the remainder of Bausch Health, the ultimate product mix between Bausch + Lomb and the Company, the impact of the spinoff transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets Bausch Health is engaged in, behavior of customers, suppliers and competitors, technological developments and legal and regulatory rules affecting Bausch Health’s business. Furthermore, there are several important internal and external considerations, approvals and conditions that will drive the ultimate timing and structure of any spinoff transaction, including, but not limited to, consideration of one-time costs; capital market conditions; determination of the pro forma capitalizations of Bausch + Lomb and the Company; final approval by the Company’s Board of Directors; receipt of applicable regulatory approvals; tax considerations, including receipt of any applicable opinions and/or rulings with respect to the Canadian and U.S. federal income tax treatment of the transaction; and compliance with U.S. and Canadian securities laws and stock exchange rules and any shareholder vote requirements that may be applicable. In addition, certain material factors and assumptions have been applied in making these forward-looking statements, including assumptions that the risks and uncertainties outlined above will not cause actual results or events to differ materially from those described in these forward-looking statements. Additional information regarding certain of these material factors and assumptions may also be found in the Company’s filings described above. If any of these assumptions are incorrect, our actual results could differ materially from those described in these forward-looking statements. The Company believes that the material factors and assumptions reflected in these forward-looking statements are reasonable in the circumstances, but readers are cautioned not to place undue reliance on any of these forward-looking statements. In particular, the Company can offer no assurance that any spinoff transaction will occur at all, or that any spinoff will occur on the terms and timelines anticipated by the Company. These forward-looking statements speak only as of the date hereof. Bausch Health undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes, unless required by law.

Non-GAAP Information

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures, including Adjusted EBITDA (non-GAAP). Adjusted EBITDA (non-GAAP) is GAAP net loss attributable to Bausch Health Companies Inc. (its most directly comparable GAAP financial measure) adjusted for interest expense, net, provision for (benefit from) income taxes, depreciation and amortization and certain other items (as further described in the appendix to our most recent earnings presentation for the second quarter of 2020, which can be here: Second Quarter 2020 Financial Results Presentation. Management believes that Adjusted EBITDA (non-GAAP), along with the GAAP measures used by management, most appropriately reflect how the Company measures the business internally and sets operational goals and incentives. In particular, the Company believes that Adjusted EBITDA (non-GAAP) focuses management on the Company’s underlying operational results and business performance. As a result, the Company uses Adjusted EBITDA (non-GAAP) both to assess the actual financial performance of the Company and to forecast future results as part of its guidance. Management believes Adjusted EBITDA (non-GAAP) is a useful measure to evaluate current performance. Adjusted EBITDA (non-GAAP) is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors. However, Adjusted EBITDA and our other non-GAAP measures are not prepared in accordance with GAAP nor do they have any standardized meaning under GAAP. In addition, other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to such similarly titled non-GAAP financial measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measures. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. They should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

The spinoff of our eye health business remains subject to a number of conditions that will determine the timing and structure of this transaction. As a result, the information contained herein is preliminary and may change as the transaction progresses, which changes what may be material.