Bausch Health Companies Inc.BHC
Bausch Health Companies Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:
•Level 1 — Quoted prices in active markets for identical assets or liabilities;
•Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | $ | 587 | $ | 574 | $ | 13 | $ | — | $ | 567 | $ | 557 | $ | 10 | $ | — | ||||||||||||||||||||||||||||||||||
| Restricted cash | $ | 16 | $ | 16 | $ | — | $ | — | $ | 20 | $ | 20 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Cross-currency swaps | $ | 5 | $ | — | $ | 5 | $ | — | $ | 6 | $ | — | $ | 6 | $ | — | ||||||||||||||||||||||||||||||||||
| Foreign currency exchange contracts | $ | 1 | $ | — | $ | 1 | $ | — | $ | 10 | $ | — | $ | 10 | $ | — | ||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition-related contingent consideration | $ | 292 | $ | — | $ | — | $ | 292 | $ | 359 | $ | — | $ | — | $ | 359 | ||||||||||||||||||||||||||||||||||
| Cross-currency swaps | $ | 158 | $ | — | $ | 158 | $ | — | $ | 40 | $ | — | $ | 40 | $ | — | ||||||||||||||||||||||||||||||||||
| Foreign currency exchange contracts | $ | 5 | $ | — | $ | 5 | $ | — | $ | 5 | $ | — | $ | 5 | $ | — | ||||||||||||||||||||||||||||||||||
Cash equivalents consist of highly liquid investments, primarily money market funds, with maturities of three months or less when purchased, and are reflected in the Consolidated Balance Sheets at carrying value, which approximates fair value due to their short-term nature. Cash, cash equivalents and restricted cash as presented in the Consolidated Balance Sheet as of December 31, 2025 includes $397 million of cash, cash equivalents and restricted cash held by legal entities of Bausch + Lomb. Cash held by Bausch + Lomb legal entities and any future cash from the operations, investing and financing activities of Bausch + Lomb, is expected to be retained by Bausch + Lomb entities and are generally not available to support the operations, investing and financing activities of other legal entities, including Bausch Health unless paid as a dividend which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch + Lomb’s shareholders.
There were no transfers into or out of Level 3 during 2025 and 2024.
Cross-currency Swaps
Bausch + Lomb enters into cross-currency swaps to mitigate fluctuation in the value of a portion of its euro-denominated net investment in its consolidated financial statements from fluctuation in exchange rates. The euro-denominated net investment being hedged is Bausch + Lomb’s investment in certain Bausch + Lomb euro-denominated subsidiaries. As of December 31, 2025, these swaps had an aggregate notional value of $1,000 million.
The assets and liabilities associated with the Bausch + Lomb’s cross-currency swaps as included in the Consolidated Balance Sheets as of December 31, 2025 and 2024 are as follows:
| (in millions) | 2025 | 2024 | |||||||||
| Other non-current liabilities | $ | (158) | $ | (40) | |||||||
| Prepaid expenses and other current assets | $ | 5 | $ | 6 | |||||||
| Net fair value | $ | (153) | $ | (34) | |||||||
The following table presents the effect of hedging instruments on the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) for 2025 and 2024:
| (in millions) | 2025 | 2024 | |||||||||
| (Loss) gain recognized in Other comprehensive income (loss) | $ | (118) | $ | 50 | |||||||
| Gain excluded from assessment of hedge effectiveness | $ | 10 | $ | 13 | |||||||
| Location of gain of excluded component | Interest Expense | ||||||||||
No portion of the cross-currency swaps were ineffective for 2025 and 2024. For 2025 and 2024, the Company received $12 million and $13 million, respectively, in interest settlements, which are reported as Investing activities in the Consolidated Statements of Cash Flows.
Foreign Currency Exchange Contracts
During 2025 and 2024, the Company entered into foreign currency exchange contracts. As of December 31, 2025, these contracts had an aggregate outstanding notional amount of $648 million.
The assets and liabilities associated with the Company’s foreign exchange contracts as included in the Consolidated Balance Sheets as of December 31, 2025 and 2024 are as follows:
| (in millions) | 2025 | 2024 | |||||||||
| Accrued and other current liabilities | $ | (5) | $ | (5) | |||||||
| Prepaid expenses and other current assets | $ | 1 | $ | 10 | |||||||
| Net fair value | $ | (4) | $ | 5 | |||||||
The following table presents the effect of the Company’s foreign exchange contracts on the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows for 2025 and 2024:
| (in millions) | 2025 | 2024 | |||||||||
(Loss) gain related to changes in fair value | $ | (9) | $ | 8 | |||||||
(Loss) gain related to settlements | $ | (12) | $ | 2 | |||||||
Acquisition-related Contingent Consideration Obligations
The fair value measurement of contingent consideration obligations arising from business combinations is determined via a probability-weighted discounted cash flow analysis, using unobservable (Level 3) inputs. These inputs may include: (i) the estimated amount and timing of projected cash flows, (ii) the probability of the achievement of the factor(s) on which the contingency is based and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly higher or lower fair value measurement. At December 31, 2025, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 6% to 16%, and a weighted average risk-adjusted discount rate of 8%. The weighted average risk-adjusted discount rate was calculated by weighting each contract’s relative fair value at December 31, 2025.
The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the years 2025 and 2024:
| (in millions) | 2025 | 2024 | ||||||||||||||||||||||||
| Beginning balance, January 1, | $ | 359 | $ | 292 | ||||||||||||||||||||||
| Adjustments to Acquisition-related contingent consideration: | ||||||||||||||||||||||||||
| Accretion for the time value of money | $ | 26 | $ | 20 | ||||||||||||||||||||||
| Fair value adjustments due to changes in estimates of other future payments | (62) | (5) | ||||||||||||||||||||||||
| Acquisition-related contingent consideration | (36) | 15 | ||||||||||||||||||||||||
| Additions (Note 3) | 3 | 89 | ||||||||||||||||||||||||
| Payments / Settlements | (34) | (37) | ||||||||||||||||||||||||
| Ending balance, December 31, | 292 | 359 | ||||||||||||||||||||||||
| Current portion | 38 | 49 | ||||||||||||||||||||||||
| Non-current portion | $ | 254 | $ | 310 | ||||||||||||||||||||||
Fair Value of Long-term Debt
The fair value of long-term debt as of December 31, 2025 and 2024 was $19,626 million and $18,243 million, respectively, and was estimated using the quoted market prices for the same or similar debt issuances (Level 2).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Apr 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.