Company: BLCO
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001860742-25-000004
Chunk: 327

Company: Bausch & Lomb Corp
Filing Date: 2025-02-19
Form: 10-K
Item: Item 1A
Chunk 327
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 Professionals with specialized skill and knowledge were used to assist in evaluating whether the Company’s Medicaid rebate program policies and methodology for estimating Medicaid rebates are compliant with the Center for Medicare and Medicaid Services and federal regulations.Acquisition of Elios Vision, Inc. – Valuation of In-Process Research and Development Asset and Product BrandsAs described in Notes 2 and 4 to the consolidated financial statements, on December 10, 2024, the Company acquired Elios Vision, Inc. (Elios Vision) for aggregate purchase consideration of approximately $188 million. Of the intangible assets acquired, $95 million of acquired in-process research and development (IPR&D) asset and $63 million of product brands were recorded. The fair value of the identifiable intangible assets was determined by management using the income approach, which requires a forecast of the expected future cash flows, including revenue growth rates, cost of goods sold, operating expenses and discount rates.The principal considerations for our determination that performing procedures relating to the valuation of the IPR&D asset and product brands acquired in the acquisition of Elios Vision is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the IPR&D asset and product brands acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates and discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the IPR&D asset and product brands acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the IPR&D asset and product brands acquired; (iii) evaluating the appropriateness of the income approach used by management; (iv) testing the completeness and accuracy of the underlying data used in the income approach; and (v) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates and discount rates. Evaluating management’s assumptions related to revenue growth rates for the IPR&D asset 

F-3

and product brands involved considering (i) the current and past performance of the Elios Vision business; (ii) the consistency with external market and industry data; and (iii) whether the