Bausch + Lomb Secures $2.8B Refinancing to Lower Costs, Fuel Growth

VAUGHAN, Ontario – January 02, 2026 – Bausch + Lomb has successfully executed a major financial maneuver, closing a previously announced refinancing of approximately $2.8 billion in term loans. The move is a clear signal of the global eye health company's proactive approach to debt management, aimed at reducing interest expenses, extending its debt runway, and creating greater financial flexibility to pursue long-term growth initiatives.

In the transaction, the company consolidated and replaced its existing Term B loans—some due in 2028 and others in 2031—with a single tranche of new “Replacement Term Loans.” All of these new loans now share a unified maturity date of January 15, 2031. This not only simplifies the company's debt structure but also provides a crucial multi-year extension on a portion of its obligations, giving management more breathing room for strategic planning and execution.

Unpacking the Financial Benefits

The immediate impact of the refinancing is a tangible reduction in borrowing costs. Bausch + Lomb secured a lower applicable interest rate margin on its new debt. The margin was cut by 0.50% per annum for the loans that were previously due in 2031 and by 0.25% for those due in 2028. Under the new terms, the applicable margin is now 3.75% for loans based on the Term SOFR (Secured Overnight Financing Rate) and 2.75% for those tied to an alternate base rate.

While the exact split of the refinanced $2.8 billion between the two original loan types is not public, the aggregate savings are significant. A back-of-the-envelope calculation suggests annual interest expense reductions could fall between $7 million and $14 million. This saved capital directly improves cash flow, which can be reinvested into the business or used to further strengthen the balance sheet. According to one credit markets analyst, the company managed to refinance with "slightly lower spreads," a positive outcome in a complex financial environment. The new loans also feature a modest 1.00% annual amortization rate, with the first payment deferred until June 30, 2026, further preserving cash in the near term.

A Strategic Move in a Leveraged Landscape

This refinancing does not occur in a vacuum. A look at Bausch + Lomb's financial standing reveals a company managing a substantial debt load. As of its latest quarterly report on September 30, 2025, the company held approximately $4.9 billion in long-term debt against $310 million in cash and equivalents. Its trailing twelve-month debt-to-equity ratio stood at 0.77, or 77%.

When compared to a key competitor like Alcon, which reported a debt-to-equity ratio closer to 21%, Bausch + Lomb appears more leveraged. This makes proactive and opportunistic debt management, like the just-completed refinancing, all the more critical. By lowering its cost of capital and extending maturities, the company demonstrates a commitment to fortifying its financial position and improving key credit metrics over time.

This action aligns perfectly with the company's long-term financial goals. Management has previously stated its aim to achieve an investment-grade credit rating, and reducing leverage is a key component of that ambition. The company's Debt/EBITDA ratio, last reported at 8.25, is a figure that investors and credit agencies will be watching closely, and the interest savings from this deal represent a small but important step in improving its earnings-to-debt profile.

Fueling the 'Vision '27' Growth Strategy

The ultimate goal of such a financial restructuring is not just cost savings but strategic empowerment. The enhanced financial flexibility from the refinancing directly supports Bausch + Lomb's ambitious "Vision '27" strategy, which was unveiled to investors in late 2025. This plan targets a compound annual revenue growth rate of 5-7% through 2028 and aims to expand adjusted EBITDA margins to approximately 23%.

Achieving these targets requires significant investment, particularly in innovation. The company has committed to investing about 7.5% of its annual revenue back into research and development. The capital freed up by lower interest payments can be channeled directly into its R&D pipeline, helping to bring new contact lenses, surgical devices, and pharmaceutical treatments to market faster. This is crucial in the highly competitive eye health sector, where continuous innovation is the key to maintaining market leadership.

Furthermore, the extended debt runway provides stability, allowing leadership to make long-term bets on market expansion or potential M&A without the looming pressure of near-term debt maturities. The company's stated goal of reducing its net leverage to around 3.5x by the end of 2028 now appears more attainable with a more favorable debt structure in place.

Capitalizing on Market Conditions

Bausch + Lomb's decision to refinance was also a timely one, capitalizing on a shifting macroeconomic landscape. After a period of aggressive rate hikes, the U.S. Federal Reserve began signaling a more dovish stance, eventually cutting its benchmark rate to a range of 3.5%-3.75% by December 2025. This easing of monetary policy created a more favorable borrowing environment for corporations.

This move coincided with a surge in the corporate debt markets. In 2024, global corporate debt issuance hit a record high as companies rushed to lock in lower rates amid strong investor appetite. With a significant portion of global corporate bonds set to mature by 2026, many companies are facing a similar need to refinance. Bausch + Lomb's successful execution places it ahead of the curve, having optimized its capital structure while market conditions were advantageous, securing its financial footing for years to come.