SEGMENT INFORMATION

Reportable Segments

During 2017, the Company divested certain businesses. In 2018, the Company began reallocating capital and resources to other businesses. As a result, during the second quarter of 2018, the Company’s CEO, who is the Company’s Chief Operating Decision Maker, commenced managing the business differently through changes in its operating and reportable segments, which necessitated a realignment of the Company's historical segment structure. This realignment is consistent with how the Company’s CEO currently: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. Pursuant to these changes, effective in the second quarter of 2018, the Company operates in the following reportable segments: (i) Bausch + Lomb/International segment, (ii) Salix segment, (iii) Ortho Dermatologics segment and (iv) Diversified Products segment. Prior period presentations of segment revenues and segment profits have been recast to conform to the current segment reporting structure. See Note 2, "SIGNIFICANT ACCOUNTING POLICIES" for additional information regarding changes to the Company's reportable segments.

The following is a brief description of the Company’s segments:

•

The Bausch + Lomb/International segment consists of: (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products, primarily comprised of Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products and (ii) with the exception of sales of Solta products, sales in Canada, Europe, Asia, Latin America, Africa and the Middle East of branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products, and Bausch + Lomb products.


•	The Salix segment consists of sales in the U.S. of gastrointestinal ("GI") products.


•	The Ortho Dermatologics segment consists of: (i) sales in the U.S. of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta medical dermatological devices.

•

The Diversified Products segment consists of sales in the U.S. of: (i) pharmaceutical products in the areas of neurology and certain other therapeutic classes, (ii) generic products, (iii) dentistry products, (iv) oncology (or Dendreon) products, (v) sales in the U.S. of women’s health (or Sprout) products and (vi) certain other businesses divested during 2017 that were not core to the Company's operations. As a result of the divestitures of the Company's equity interest in Dendreon (June 28, 2017) and Sprout (December 20, 2017), the Company exited the oncology and women's health businesses, respectively.

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets, Asset impairments, In-process research and development costs, Restructuring and integration costs, Acquisition-related contingent consideration costs and Other expense (income), net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.

Corporate includes the finance, treasury, certain research and development programs, tax and legal operations of the Company’s businesses and incurs certain expenses, gains and losses related to the overall management of the Company, which are not allocated to the other business segments. In assessing segment performance and managing operations, management does not review segment assets. Furthermore, a portion of share-based compensation is considered a corporate cost, since the amount of such expense depends on Company-wide performance rather than the operating performance of any single segment.

Segment Revenues and Profits

Segment revenues and profits were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2018			2017			2018			2017
Revenues:
Bausch + Lomb/International	$	1,209		$	1,223		$	2,312		$	2,357
Salix	441			387			863			689
Ortho Dermatologics	142			162			283			379
Diversified Products	336			461			665			917
	$	2,128		$	2,233		$	4,123		$	4,342

Segment profits:
Bausch + Lomb/International	$	350		$	371		$	647		$	697
Salix	292			232			564			400
Ortho Dermatologics	59			68			104			191
Diversified Products	258			302			497			608
	959			973			1,812			1,896
Corporate	(161		)	(139		)	(275		)	(306		)
Amortization of intangible assets	(741		)	(623		)	(1,484		)	(1,258		)
Goodwill impairments	—			—			(2,213		)	—
Asset impairments	(301		)	(85		)	(345		)	(223		)
Restructuring and integration costs	(7		)	(18		)	(13		)	(36		)
Acquired in-process research and development costs	—			(1		)	(1		)	(5		)
Acquisition-related contingent consideration	6			49			4			59
Other (expense) income, net	—			19			(11		)	259
Operating (loss) income	(245		)	175			(2,526		)	386
Interest income	3			3			6			6
Interest expense	(435		)	(459		)	(851		)	(933		)
Loss on extinguishment of debt	(48		)	—			(75		)	(64		)
Foreign exchange and other	(9		)	39			18			68
Loss before (provision for) benefit from income taxes	$	(734	)	$	(242	)	$	(3,428	)	$	(537	)

Revenues by Segment and Product Category

Revenues by segment and product category were as follows:



	Three Months Ended June 30, 2018										Three Months Ended June 30, 2017
(in millions)	Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total		Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total
Pharmaceuticals	$	242	$	441	$	103	$	243	$	1,029	$	252	$	386	$	126	$	376	$	1,140
Devices	389		—		32		—		421		360		—		27		—		387
OTC	368		—		—		—		368		380		—		—		—		380
Branded and Other Generics	193		—		—		89		282		211		—		—		82		293
Other revenues	17		—		7		4		28		20		1		9		3		33
	$	1,209	$	441	$	142	$	336	$	2,128	$	1,223	$	387	$	162	$	461	$	2,233

	Six Months Ended June 30, 2018										Six Months Ended June 30, 2017
(in millions)	Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total		Bausch + Lomb/ International		Salix		Ortho Dermatologics		Diversified Products		Total
Pharmaceuticals	$	445	$	863	$	208	$	479	$	1,995	$	481	$	688	$	308	$	744	$	2,221
Devices	752		—		61		—		813		682		—		50		—		732
OTC	694		—		—		—		694		756		—		—		—		756
Branded and Other Generics	384		—		—		179		563		400		—		—		167		567
Other revenues	37		—		14		7		58		38		1		21		6		66
	$	2,312	$	863	$	283	$	665	$	4,123	$	2,357	$	689	$	379	$	917	$	4,342

Geographic Information

Revenues are attributed to a geographic region based on the location of the customer were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2018		2017		2018		2017
U.S. and Puerto Rico	$	1,261	$	1,344	$	2,437	$	2,639
China	98		82		182		150
Canada	76		76		153		155
Poland	52		45		115		96
France	58		53		113		101
Japan	55		57		106		108
Mexico	54		52		97		90
Germany	42		38		92		80
Egypt	44		43		89		75
Russia	40		47		68		91
United Kingdom	31		25		58		50
Italy	23		21		45		39
Spain	23		21		44		38
Other	271		329		524		630
	$	2,128	$	2,233	$	4,123	$	4,342

Major Customers

Customers that accounted for 10% or more of total revenues were as follows:



	Six Months Ended June 30,
	2018	2017
McKesson Corporation (including McKesson Specialty)	17%	19%
AmerisourceBergen Corporation	18%	14%
Cardinal Health, Inc.	13%	14%