hydrogel ("SiHy")) daily disposable contact lenses, Biotrue® ONEday daily disposables, PureVision® SiHy contact lenses, SofLens® daily disposables and Bausch + Lomb ULTRA® contact lenses.
Initial Public Offering and Separation of the Bausch + Lomb Eye Health Business
See Note 2, "SIGNIFICANT ACCOUNTING POLICIES" to our unaudited interim Condensed Consolidated Financial Statements for additional information.
We continuously search for new product opportunities through internal development and strategic licensing agreements, that, if successful, will allow us to leverage our commercial footprint and supplement our existing product portfolio and address specific unmet needs in the market.
increased comfort for end users. This combination should continue to benefit our other SiHy brands: Bausch + Lomb ULTRA®, AQUALOX™ and PureVision®.
•We are developing a custom-finished orthokeratology lens with a proprietary software based fitting system for the treatment of myopia, especially in children, which we expect to launch in 2023, subject to FDA approval.
•We are developing certain cosmetic contact lenses with improved color technology, which we expect to launch in certain Asian markets in 2023 and 2024.
•We are developing new innovative, personalized corneal treatments for our Teneo Excimer laser, which we expect to launch in the U.S. in 2023.
is highly uncertain. Under certain agreements, the Company may be required to make payments contingent upon the achievement of specific developmental, regulatory, or commercial milestones.
We are and we will continue to consider further strategic licensing opportunities to address the unmet needs of the consumer, patient and eye health professional, some of which could be material in size.
We are considering further acquisition opportunities within our core therapeutic areas, some of which could be material in size.
Investment in Our Manufacturing Facilities
In support of our core businesses, we have and continue to make strategic investments in our infrastructure, the most significant of which are at our Waterford facility in Ireland, our Rochester facility in New York and our Lynchburg facility in Virginia.
and be the main point of distribution for these products in the U.S. This expansion program is expected to be completed in the second half of 2022.
We believe the investments in our Waterford, Rochester and Lynchburg facilities further demonstrates the growth potential we see in our Bausch + Lomb products.
In addition to the actions previously outlined, the events described below have affected and may affect our business trends. The matters discussed in this section contain Forward-Looking Statements. Please see "Forward-Looking Statements" for additional information.
Global Minimum Corporate Tax Rate
employer-sponsored insurance coverage, and we cannot predict how future federal or state legislative or administrative changes relating to the reform will affect our business.
In March 2021, the U.S. Congress enacted the American Rescue Plan Act of 2021. One of the provisions included within the American Rescue Plan Act of 2021 eliminated the Maximum Rebate Amount for Single Source drugs and Innovator Multiple Source drugs in the Medicaid Drug Rebate Program. We are currently reviewing the legislation, the impact of which is uncertain at this time.
Generic Competition and Loss of Exclusivity
Summary of the Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
Operating income for the three months ended June 30, 2022 and 2021 was $56 million and $58 million, respectively, a decrease of $2 million which reflects, among other factors:
•an increase in R&D of $4 million primarily due to higher medical device regulation costs;
•a decrease in Amortization of intangible assets of $13 million, primarily due to fully amortized intangible assets no longer being amortized in 2022; and
•a favorable change in Other (income) expense, net of $4 million, primarily due to: (i) a fair value adjustment related to acquisition-related contingent consideration and (ii) lower asset impairment charges, partially offset by higher restructuring, integration and separation costs.
Operating income for the three months ended June 30, 2022 and 2021 was $56 million and $58 million, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $98 million and $111 million and Share-based compensation of $11 million and $15 million, respectively.
Summary of the Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021
Operating income for the six months ended June 30, 2022 and 2021 was $110 million and $143 million, respectively, a decrease of $33 million which reflects, among other factors:
•an increase in R&D of $14 million primarily due to higher medical device regulation costs;
•a decrease in Amortization of intangible assets of $24 million, primarily due to fully amortized intangible assets no longer being amortized in 2022; and
Operating income for the six months ended June 30, 2022 and 2021 was $110 million and $143 million, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $193 million and $217 million and Share-based compensation of $27 million and $29 million, respectively.
Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
Cash Discounts and Allowances, Chargebacks and Distribution Fees
Cost of Goods Sold (exclusive of amortization and impairments of intangible assets)
Cost of goods sold as a percentage of Product sales was 40.3% and 39.2% for the three months ended June 30, 2022 and 2021, respectively, an increase of 1%, primarily attributable to higher manufacturing variances, as previously discussed, partially offset by the increase in net realized pricing.
Selling, General and Administrative Expenses
We expect to incur higher SG&A costs going forward as a standalone entity due to dis-synergies that result from the Separation.
Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, generally 1 to 17 years. Management continually assesses the useful lives related to our long-lived assets to reflect the most current assumptions.
See Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Condensed Consolidated Financial Statements for further details related to the Amortization of intangible assets.
Other (income) expense, net for the three months ended June 30, 2022 and 2021 consists of the following:
See Note 16, "INCOME TAXES" to our unaudited interim Condensed Consolidated Financial Statements for further details.
Reportable Segment Revenues and Profits
The following is a brief description of Bausch + Lomb's segments:
Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets and Other (income) expense, net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance. See Note 19, "SEGMENT INFORMATION" to our unaudited interim Condensed Consolidated Financial Statements for a reconciliation of segment profit to Income before provision for income taxes.
Organic Revenues and Organic Growth Rates (non-GAAP)
to assess performance of its reportable segments, and the Company in total, without the impact of foreign currency exchange fluctuations and recent acquisitions, divestitures and product discontinuations. The Company believes that such measures are useful to investors as they provide a supplemental period-to-period comparison.
Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021
The changes in our segment revenues and segment profits for the six months ended June 30, 2022 are discussed in further detail in the respective subsequent sections titled "-Reportable Segment Revenues and Profits."
Cash Discounts and Allowances, Chargebacks and Distribution Fees
Provisions recorded to reduce gross product sales to net product sales and revenues for the six months ended June 30, 2022 and 2021 were as follows:
Cost of Goods Sold (exclusive of amortization and impairments of intangible assets)
Cost of goods sold as a percentage of Product sales was 39.8% and 38.6% for the six months ended June 30, 2022 and 2021, respectively, an increase of 1.2% primarily attributable to: (i) higher manufacturing variances and (ii) year-over-year changes in product mix.
Selling, General and Administrative Expenses
We expect to incur higher SG&A costs going forward as a standalone entity due to dis-synergies that result from the Separation.
See Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Condensed Consolidated Financial Statements for further details related to the Amortization of intangible assets.
Other expense, net for the six months ended June 30, 2022 and 2021 consists of the following:
Foreign exchange and other was a net income of $9 million and $1 million for the six months ended June 30, 2022 and 2021, respectively.
See Note 16, "INCOME TAXES" to our unaudited interim Condensed Consolidated Financial Statements for further details.
Reportable Segment Revenues and Profits
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