Bausch & Lomb (BLCO) risk factors, FY2024 10-K

Risks Relating to Economic and Market Conditions

1. 01Current market and economic conditions in one or more of our markets could impact our ability to grow our business
2. 02Inflation and other macroeconomic factors could materially adversely affect our business and operations

Risks Relating to the Separation

1. 03We may not realize the anticipated benefits from the Separation, and the Separation could harm our business
2. 04The Separation is subject to certain uncertainties. Furthermore, the Distribution or the Sale Transaction may not occur
3. 05The Separation is subject to challenge and could be subject to further challenges in the future, any of which could delay or prevent the consummation of such transactions or cause them to occur on worse terms than we currently expect
4. 06We have limited history of operating as an independent company, and our historical financial information prior to the B+L IPO is not necessarily representative of the results that we would have achieved as an independent or standalone company and may not be a reliable indicator of our future results
5. 07Until the completion of the Separation, BHC will control the direction of our business, and the concentrated ownership of our common shares will prevent you and other shareholders from influencing significant decisions
6. 08Some of our directors and officers may have actual or potential conflicts of interest because of their equity ownership in BHC, and some of our directors may have actual or potential conflicts of interest because they also serve as directors of BHC
7. 09To preserve the tax-free treatment of certain transactions related to the Distribution, we may not be able to engage in certain transactions. We could incur significant tax liabilities, or be liable to BHC, if certain transactions occur which result in these transactions or the Distribution being subject to tax
8. 10Certain requirements of the public company “butterfly reorganization” rules in Section 55 of the Tax Act depend on events that may not be within our control
9. 11We potentially could have received better terms from unaffiliated third parties than the terms we received in our agreements with BHC
10. 12As long as BHC owns a majority of our common shares, we may rely on certain exemptions from the corporate governance requirements of the NYSE available to “controlled companies” and of the TSX available to “majority controlled” companies
11. 13The Distribution or future sales by BHC or others of our common shares, or the perception that the Distribution or such sales may occur, could depress our common share price
12. 14The services that BHC provides to us may not be sufficient to meet our needs, which may result in increased costs and otherwise adversely affect our business
13. 15Development and Regulatory Risks
14. 16Our marketed products will be subject to ongoing regulatory review
15. 17devices for which they are responsible for placing on the market in the UK, whether in Great Britain or Northern Ireland, as required by the UM MDR 2002. This may create added expense and challenges as explained below
16. 18Complying with existing government regulation of dietary supplements, including our eye vitamins and mineral supplements, in the U.S., Canada and elsewhere could increase our costs significantly and adversely affect our financial results
17. 19Manufacturing and Supply Risks
18. 20have the ability to increase the supply price payable by us for the manufacture and supply of our products, in some cases without our consent
19. 21Changes in inventory levels or fluctuations in buying patterns by our large distributor and retail customers may adversely affect our sales and earnings and add to sales variability from quarter to quarter
20. 22Our approved products may not achieve or maintain expected levels of market acceptance
21. 23impact on the utilization of our products and, as a result, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline
22. 24Catastrophic events may disrupt our business
23. 25The loss of the services of, or our inability to recruit, retain, motivate, our executives and other key employees could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline

Risks Relating to Our Business and our Business Strategy

1. 26Our policies regarding returns, allowances and chargebacks, and marketing programs adopted by wholesalers, may reduce our revenues in future fiscal periods
2. 27We have various indemnity agreements and indemnity arrangements in place, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material
3. 28Our indebtedness could adversely affect our business and our ability to meet our obligations

Risks Relating to the International Scope of our Business

1. 29Our business, financial condition, cash flows and results of operations are subject to risks arising from the international scope of our operations
2. 30Due to the large portion of our business conducted in currency other than U.S. dollars, we have significant foreign currency risk

Risks Relating to Intellectual Property and Exclusivity

1. 31Intellectual property litigation could cause us to spend substantial resources, distract our personnel from their normal responsibilities and cause the value of our common shares and/or debt securities to decline

Risks Relating to Information Technology

1. 32We utilize artificial intelligence, which could expose us to liability or could have a material adverse effect on our business and financial condition

Tax- and Accounting-related Risks

1. 33Our effective tax rates may increase
2. 34We have significant goodwill and other intangible assets and potential impairment of goodwill and other intangibles may have a significant adverse impact on our profitability
3. 35For example, in 2024, 2023 and 2022, we recognized impairments to finite-lived and indefinite-lived intangible assets of $5 million, less than $1 million and $1 million, respectively. These asset impairments were primarily attributable to the discontinuance of certain product lines
4. 36See Note 5, “FAIR VALUE MEASUREMENTS” and Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our audited Consolidated Financial Statements included elsewhere in this Form 10-K for further information on these impairment charges

Legal and Reputational Risks

1. 37We are or may become subject to legal and governmental proceedings that are uncertain, costly and time-consuming and could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline
2. 38proceedings will remain with BHC and will be controlled by BHC, but the Company will share in applicable future liabilities, should any result from these proceedings
3. 39We depend on third parties to meet their contractual, legal, regulatory and other obligations
4. 40effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline
5. 41Our marketing, promotional and business practices, as well as the manner in which sales forces interact with purchasers, prescribers and patients, are subject to extensive regulation and any material failure to comply could result in significant sanctions against us

Risks Relating to Specific Legislation and Regulations

1. 42fines and penalties, exclusion from federal health care programs or other sanctions, including consent orders or corporate integrity agreements
2. 43Legislative or regulatory reform of the health care system may affect our ability to sell our products profitably and could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline
3. 44We are currently governed by the corporate laws of Canada that in some cases have a different effect on shareholders than the corporate laws of Delaware

Risks Relating to our Common Shares

1. 45Our by-laws designate specific courts in Canada and the federal district courts of the United States as the exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us
2. 46Our operating results and financial condition may fluctuate