LEASESAs disclosed in detail in Note 2, “SIGNIFICANT ACCOUNTING POLICIES”, the Company leases certain facilities, vehicles and equipment principally under multi-year agreements. In 2025, Bausch + Lomb entered into a sale and master lease agreement with a third party. Under this agreement, in October 2025, Bausch + Lomb sold various fixed asset equipment, for a sale price of $36 million, and then leased the equipment back through a three-year leaseback transaction. This transaction did not qualify as a sale under the applicable accounting guidance, and, as such, the associated equipment remained included within Property, plant and equipment, net. The Company refers to these failed sale-leasebacks as “financial leases” and recorded the related obligations in Financial leases and Non-current portion of Financial leases in the Consolidated Balance Sheets.
Right-of-use assets and lease liabilities associated with the Company’s operating leases and fixed asset equipment and financial lease associated with Bausch + Lomb’s lease back transaction are included in the Consolidated Balance Sheets as of December 31, 2025 and 2024 as follows:
| | | | | | | | | | | |
| (in millions) | 2025 | | 2024 |
| Right-of-use assets included in: | | | |
| Other non-current assets | $ | 215 | | | $ | 211 | |
| | | |
| Fixed asset equipment included in: | | | |
| Property, plant and equipment, net | $ | 36 | | | $ | — | |
| | | |
| Lease liabilities included in: | | | |
| Accrued and other current liabilities | $ | 61 | | | $ | 58 | |
| Other non-current liabilities | 167 | | | 165 | |
Financial leases | 11 | | | — | |
Non-current portion of financial leases | 23 | | | — | |
| Total lease liabilities | $ | 262 | | | $ | 223 | |
As of December 31, 2025, 2024 and 2023 the Company’s finance leases were not material and for the years 2025, 2024 and 2023, sub-lease income and short-term lease expense were not material. In December 2023, the Company exercised an option to early terminate the lease period for an office building in Bridgewater, New Jersey. As a result, the Company recognized a net charge of $12 million, representing adjustment to the lease liability to reduce it to the amount related to the remaining lease term, write-off of the right-of-use asset and a charge for a required termination payment.
Lease expense for the years 2025, 2024 and 2023 include:
| | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Operating lease costs | $ | 83 | | | $ | 74 | | | $ | 65 | |
| Variable operating lease costs | $ | 21 | | | $ | 21 | | | $ | 16 | |
| | | | | |
| Interest on financial leases | $ | 1 | | | $ | — | | | $ | — | |
Other information related to operating leases and other financial liabilities for 2025, 2024 and 2023 is as follows: | | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Cash paid from operating cash flows for amounts included in the measurement of lease liabilities | $ | 86 | | | $ | 85 | | | $ | 73 | |
| Cash paid from operating cash flows for financial leases | $ | 1 | | | $ | — | | | $ | — | |
| Cash paid from financing cash flows for financial leases | $ | 2 | | | $ | — | | | $ | — | |
| Cash received from financing cash flows for financial leases | $ | 36 | | | $ | — | | | $ | — | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 60 | | | $ | 86 | | | $ | 27 | |
| Weighted-average remaining lease term - operating leases | 6.1 years | | 6.2 years | | 5.5 years |
| Weighted-average remaining lease term - financial leases | 2.8 years | | — | | | — | |
| Weighted-average discount rate - operating leases | 8.1 | % | | 7.9 | % | | 7.1 | % |
| Weighted-average discount rate - financial leases | 7.5 | % | | — | | | — | |
As of December 31, 2025, future payments under noncancelable operating leases, and under the leaseback agreement that did not qualify as a sale, for each of the five succeeding years ending December 31 and thereafter are as follows:
| | | | | | | | | | | | |
| (in millions) | | Operating Leases | | Financial Leases |
| 2026 | | $ | 77 | | | $ | 13 | |
| 2027 | | 63 | | | 13 | |
| 2028 | | 44 | | | 12 | |
| 2029 | | 22 | | | — | |
| 2030 | | 14 | | | — | |
| Thereafter | | 72 | | | — | |
| Total | | 292 | | | 38 | |
| Less: Imputed interest | | 64 | | | 4 | |
| Present value of remaining lease payments | | 228 | | | 34 | |
| Less: Current portion | | 61 | | | 11 | |
| Non-current portion | | $ | 167 | | | $ | 23 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.