Bausch Health(BHC) - 2023 Q4 - Annual Report

Revenue and Financial Performance - Total revenues for 2023 were $8,757 million, an increase from$ 8,124 million in 2022 and $8,434 million in 2021[27]. - The Salix segment generated$ 2,250 million in revenue for 2023, maintaining a 26% share of total revenues, consistent with 2022[27]. - The Bausch + Lomb segment accounted for $4,146 million in revenue, representing 47% of total revenues, up from 46% in 2022[27]. - Xifaxan product revenues were$ 1,810 million in 2023, compared to $1,692 million in 2022 and$ 1,644 million in 2021[30]. - In 2023, the U.S. and Puerto Rico accounted for approximately 59% of total revenue, while China accounted for approximately 5%[78]. - Cencora Inc. accounted for 19% of total revenue in 2023, followed by McKesson Corporation at 15% and Cardinal Health, Inc. at 13%[79]. Research and Development - The company is focusing on R&D to enhance its product portfolio and is exploring co-promotions, licensing agreements, and strategic acquisitions[26]. - R&D expenses for 2023 were $604 million, representing approximately 7% of revenue, up from$ 529 million (7%) in 2022 and $465 million (6%) in 2021[45]. - The company has over 90 R&D projects in the pipeline, supported by approximately 1,450 dedicated R&D and quality assurance employees[44]. - CABTREO Topical Gel, a new acne treatment, received FDA approval and is set to launch in Q1 2024[39]. - MIEBO, the first FDA-approved eye drop targeting tear evaporation, was launched in the U.S. in Q3 2023[42]. Market and Competitive Landscape - The company faces increased competition from generic pharmaceutical products as patents expire, leading to potential price reductions[85]. - The company is impacted by global economic conditions, including inflation and foreign currency exchange volatility, which may affect revenues and expenses[704]. - The company is facing risks related to the introduction of generic competitors, particularly for its Xifaxan product line, which could significantly impact revenues[704]. Regulatory and Compliance - The company is subject to extensive regulations regarding the research, development, and marketing of its products, requiring substantial time and financial resources[50]. - Compliance with the U.S. Foreign Corrupt Practices Act and similar laws is mandatory, with violations potentially leading to significant penalties[58]. - The company is subject to various state, federal, and international laws regarding the processing of health-related and personal information, including HIPAA, which mandates uniform standards for electronic information exchange[59]. - The GDPR imposes strict obligations on the processing of personal data, with potential fines of up to 4% of global annual revenue or €20 million for violations[62]. - The company is subject to environmental regulations that could result in substantial fines or penalties if compliance is not maintained[76]. Operational Efficiency and Manufacturing - The company operates approximately 37 manufacturing sites worldwide, with 25 being Bausch + Lomb facilities[87]. - In 2023, 25% of product sales were produced in total or in part by third-party manufacturers[91]. - The company continues to invest in its manufacturing facilities to enhance operational capabilities[87]. Financial Obligations and Liabilities - As of December 31, 2023, the company had$ 15,108 million in fixed rate debt and $5,899 million in variable rate debt[642]. - A 1% change in foreign currency exchange rates would have impacted the shareholders' deficit by approximately$ 62 million[639]. - The company faces substantial debt obligations and potential future indebtedness, impacting its financial condition and cash flows[700]. - The company is subject to various loss contingencies, which may materially affect its financial condition and cash flows[687]. Goodwill and Impairment - The company recorded goodwill impairment charges of $493 million in 2023,$ 824 million in 2022, and $469 million in 2021[663]. - The carrying value of the Generics reporting unit exceeded its fair value as of October 1, 2023, leading to a recognized goodwill impairment[676]. - The Dermatology reporting unit experienced a goodwill impairment of$ 151 million due to lower realized pricing and increased market interest rates, with a long-term growth rate of 0.0% and a discount rate of 10.75% used in the assessment[671]. Strategic Initiatives and Future Outlook - The company is committed to improving access to medications through patient assistance programs, providing eligible patients with prescription products at no cost for up to one year[109]. - The company is evaluating the potential effects of macroeconomic factors, including inflation, on its business operations[698]. - The company anticipates uncertainties associated with the launch of new products, including the Blink product line and MIEBO, affecting market acceptance and demand[701]. - The company is working to stabilize its Dermatology business, focusing on the success of recently launched products and pipeline approvals[702].