What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 355 added, 208 removed, 423 unchanged (57% of the section changed)

1 unchanged sentence

Solventum Corporation

Condensed Combined Statements of Income

Three months ended March 31,

Condensed Consolidated and Combined Statements of Income

Three months ended June 30, Six months ended June 30,

(Millions, except per share data) 2024 2023 2024 2023

20 unchanged sentences

Diluted 173.5 172.7 173.1 172.7

The accompanying Notes to Condensed Combined Financial Statements are an integral part of these statements.

The accompanying Notes to the Condensed Consolidated and Combined Financial Statements are an integral part of these statements.

Solventum Corporation

Condensed Combined Statements of Comprehensive Income

Three months ended March 31,

Condensed Consolidated and Combined Statements of Comprehensive Income

Three months ended June 30, Six months ended June 30,

(Millions) 2024 2023 2024 2023

2 unchanged sentences

Cumulative translation adjustment 1 22 ( 85 ) 90

Defined benefit pension adjustment — —

Defined benefit pension and postretirement plans adjustment 10 — 10 —

Cash flow hedging instruments 1 — 1 —

Total other comprehensive income (loss), net of tax 12 22 ( 74 ) 90

Comprehensive income $ 101 $ 343 $ 252 $ 704

The accompanying Notes to Condensed Combined Financial Statements are an integral part of these statements.

The accompanying Notes to the Condensed Consolidated and Combined Financial Statements are an integral part of these statements.

Solventum Corporation

Condensed Combined Balance Sheets

March 31, December 31,

Condensed Consolidated and Combined Balance Sheets

June 30, December 31,

(Millions) 2024 2023

1 unchanged sentence

Cash and cash equivalents $ 897 $ 194

Receivables — net of allowances of $ 86 and $ 82

Accounts receivable — net of allowances of $ 83 and $ 82

Due from related parties 289 —

Finished goods 500 453

11 unchanged sentences

Accounts payable $ 495 $ 477

Due to related parties 611 —

Unearned revenue 505 574

7 unchanged sentences

Commitments and contingencies (Note 11)

Common stock, par value $ 0.01 per share, 750,000,000 shares authorized

Shares issued and outstanding - June 30, 2024:

Shares issued and outstanding - December 31, 2023:

Additional paid-in-capital 3,719 —

Retained earnings 89 —

Net parent investment — 12,003

2 unchanged sentences

Total liabilities and equity $ 14,578 $ 13,943

The accompanying Notes to Condensed Combined Financial Statements are an integral part of these statements.

The accompanying Notes to the Condensed Consolidated and Combined Financial Statements are an integral part of these statements.

Solventum Corporation

Condensed Combined Statements of Cash Flows

Three months ended March 31,

Condensed Consolidated and Combined Statements of Changes in Equity

Three Months Ended June 30, 2024 and June 30, 2023

(Millions) Shares Outstanding Par Value Additional Paid-In-Capital Retained Earnings Net Parent Investment Accumulated Other Comprehensive Income (Loss) Total

Balance at March 31, 2024 — $ — $ — $ — $ 4,809 $ ( 958 ) $ 3,851

Net income — — — 89 — — 89

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — 1 1

Defined benefit pension — — — — — 10 10

Cash flow hedging — — — — — 1 1

Total other comprehensive income (loss), net of tax — — — — — 12 12

Net transfers to 3M

— — — — ( 1,134 ) 3 ( 1,131 )

Stock-based compensation — — 46 — — — 46

Issuance of common stock in connection with Spin-Off and reclassification of net parent investment

173 2 3,673 — ( 3,675 ) — —

Balance at June 30, 2024 173 $ 2 $ 3,719 $ 89 $ — $ ( 943 ) $ 2,867

Balance at March 31, 2023 — $ — $ — $ — $ 12,099 $ ( 429 ) $ 11,670

Net income — — — — 321 — 321

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — 22 22

Defined benefit pension — — — — — — —

Total other comprehensive income (loss), net of tax — — — — — 22 22

Net transfers to 3M — — — — ( 284 ) — ( 284 )

Balance at June 30, 2023 — $ — $ — $ — $ 12,136 $ ( 407 ) $ 11,729

Solventum Corporation

Condensed Consolidated and Combined Statements of Changes in Equity, Continued

Six Months Ended June 30, 2024 and June 30, 2023

(Millions) Shares Outstanding Par Value Additional Paid-In-Capital Retained Earnings Net Parent Investment Accumulated Other Comprehensive Income (Loss) Total

Balance at December 31, 2023 — $ — $ — $ — $ 12,003 $ ( 337 ) $ 11,666

Net income — — — 89 237 — 326

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — ( 85 ) ( 85 )

Defined benefit pension — — — — — 10 10

Cash flow hedging — — — — — 1 1

Total other comprehensive income (loss), net of tax — — — — — ( 74 ) ( 74 )

Net transfers to 3M

— — — — ( 8,571 ) ( 532 ) ( 9,103 )

Stock-based compensation — — 46 — 6 — 52

Issuance of common stock in connection with Spin-Off and reclassification of net parent investment

173 2 3,673 — ( 3,675 ) — —

Balance at June 30, 2024 173 $ 2 $ 3,719 $ 89 $ — $ ( 943 ) $ 2,867

Balance at December 31, 2022 — $ — $ — $ — $ 12,239 $ ( 497 ) $ 11,742

Net income — — — — 614 — 614

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — 90 90

Defined benefit pension adjustment — — — — — — —

Total other comprehensive income (loss), net of tax — — — — — 90 90

Net transfers to 3M — — — — ( 717 ) — ( 717 )

Balance at June 30, 2023 — $ — $ — $ — $ 12,136 $ ( 407 ) $ 11,729

The accompanying Notes to the Condensed Consolidated and Combined Financial Statements are an integral part of these statements.

Solventum Corporation

Condensed Consolidated and Combined Statements of Cash Flows

Six months ended June 30,

(Millions) 2024 2023

8 unchanged sentences

Accounts receivable 70 ( 30 )

Due from related parties 131 —

Inventories ( 57 ) ( 5 )

Accounts payable 132 30

Due to related parties

All other operating activities 129 10

12 unchanged sentences

Cash and cash equivalents at end of period $ 897 $ 39

The accompanying Notes to Condensed Combined Financial Statements are an integral part of these statements.

The accompanying Notes to the Condensed Consolidated and Combined Financial Statements are an integral part of these statements.

Solventum Corporation

Notes to the Condensed Combined Financial Statements

Notes to the Condensed Consolidated and Combined Financial Statements

Significant Accounting Policies

Organization and Description of Business

Solventum Corporation ("Solventum" or the "Company") is a carve-out business of 3M Company ("3M").

Solventum Corporation ("Solventum" or the "Company") was a carve-out business of 3M Company ("3M").

On April 1, 2024 (the "Distribution Date"), 3M completed the previously announced spin-off of Solventum Corporation (the "Spin-Off").

6 unchanged sentences

Basis of Presentation

Solventum is a carve-out business of 3M Company .

The unaudited condensed combined financial statements have been derived from the consolidated financial statements and accounting records of 3M, including the historical cost basis of assets and liabilities comprising the Company, as well as the historical revenues, direct costs, and allocations of indirect costs attributable to the operations of the Company, using the historical accounting policies applied by 3M.

The Company’s condensed combined balance sheets include 3M assets and liabilities that are specifically identifiable or otherwise attributable to the Company.

As noted above, the Spin-Off was not effective until after the conclusion of the three-month financial reporting periods presented herein.

These unaudited condensed combined financial statements do not purport to reflect what the results of operations, comprehensive income, financial position, or cash flows would have been had the Company operated as a separate, standalone entity during the periods presented.

The unaudited condensed combined financial statements have been prepared in accordance with U.S.

The unaudited condensed consolidated and combined financial statements have been prepared in accordance with U.S.

generally accepted accounting principles ( " GAAP " ) and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission and present the historical results of operations, comprehensive income, and cash flows for the three months ended March 31, 2024 and 2023, and the financial position as of March 31, 2024 and December 31, 2023.The interim condensed combined financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of the Company’s consolidated financial position, results of operations and cash flows for the periods presented.

Securities and Exchange Commission and present the historical results of operations, and comprehensive income for the three and six months ended June 30, 2024 and 2023, cash flows for the six months ended June 30, 2024 and 2023, and the financial position as of June 30, 2024 and December 31, 2023.

The interim condensed consolidated and combined financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of the Company’s consolidated and combined financial position, results of operations and cash flows for the periods presented.

These adjustments consist of normal, recurring items.

The results of operations for any interim period are not necessarily indicative of results for the full year.

The interim condensed combined financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q.

These unaudited condensed combined financial statements include general corporate expenses and shared expenses of 3M that were historically incurred by or charged to Solventum for certain support functions that are provided on a centralized basis, such as expenses related to information technology, finance and accounting, human resources, legal, and use of shared assets.

Additional information is included in Note 11 "Related Parties".

Direct usage has been used to attribute expenses that are specifically identifiable to the business, where practicable.

In certain instances, these expenses have been allocated to Solventum primarily based on a pro rata proportion of revenue.

The attribution methodologies of corporate and shared expenses reasonably reflect the utilization of services by, or the benefits provided to Solventum, in the aggregate.

The unaudited condensed combined financial statements reflect all the costs of doing business;

the allocations may not, however, reflect the expenses Solventum would have incurred as a standalone company for the periods presented.

The results of operations for any interim periods are not necessarily indicative of results for the full year.

Effective April 1, 2024, the Company's financial statements are presented on a consolidated basis, as the Spin-Off from 3M was completed on such date.

The unaudited financial statements for all periods following the Spin-Off are referred to as the "Condensed Consolidated Financial Statements." Prior to April 1, 2024, Solventum was a carve-out business of 3M Company .

The Company's financial statements prior to April 1, 2024 were prepared on a combined basis and were derived from the consolidated financial statements and accounting records of 3M, including the historical cost basis of assets and liabilities comprising the Company, as well as the historical revenues, direct costs, and allocations of indirect costs attributable to the operations of the Company, using the historical accounting policies applied by 3M.

The historical financial statements of the Company prior to April 1, 2024, are referred to as the "Condensed Combined Financial Statements".

All intercompany transactions and balances within Solventum have been eliminated.

3M manages cash and other treasury operations at a centralized level.

As such, cash and cash equivalents in the condensed combined balance sheets primarily represent cash managed by Solventum subsidiaries directly and cash that has not yet been swept to 3M’s central accounts.

Cash transfers to and from the cash management accounts of 3M are reflected in the condensed combined statements of cash flows as “Net transfers to 3M.” These arrangements may not be reflective of the way the Company would have financed its operations had it been a separate, standalone entity during the periods presented.

In connection with the consummation of the Spin-Off, in February 2024 Solventum issued $ 6.9 billion senior unsecured notes and drew $ 1.48 billion under senior unsecured term loan credit facilities and made direct and indirect cash payments to 3M as partial consideration for 3M's transfer of its health care business to Solventum.

All of the net proceeds from the offering of the notes were paid to 3M, other than the amounts retained in order to achieve the $ 600 million retained cash target.

Other than the notes issued by the

Company, 3M’s third-party debt and related interest expense have not been attributed to the Company because the Company is not the legal obligor of the debt and the borrowings are not specifically identifiable to the Company.

See Note 7 “Long-term Debt and Short-term Borrowings” for further information.

The operations of Solventum are included in the consolidated U.S.

federal, and certain state, local and foreign income tax returns filed by 3M, where applicable.

Income tax expense and other income tax related information contained in these unaudited condensed combined financial statements are presented following the separate return methodology as if the Company filed its own income tax returns.

The income tax results of Solventum as presented in the unaudited condensed combined financial statements may not be reflective of the results the Company would generate in the future.

In jurisdictions where Solventum has been included in income tax returns filed by 3M, any income taxes payable resulting from the related income tax provision have been reflected within “Net parent investment” on the condensed combined balance sheets.

The unaudited condensed combined financial statements and related footnotes as of and for the three months ended March 31, 2024 should be read in conjunction with the audited combined financial statements as of and for the year ended December 31, 2023 contained in Exhibit 99.1 to Amendment No.

2 to the Company’s Registration Statement on Form 10 as filed with the Securities and Exchange Commission (“SEC”) on March 11, 2024, which became effective on March 13, 2024 (the “Information Statement”).

These unaudited condensed consolidated and combined financial statements include certain transactions with 3M, which are disclosed as related party transactions in Note 14 "Related Parties".

The unaudited condensed consolidated and combined financial statements and related footnotes as of and for the three and six months ended June 30, 2024 should be read in conjunction with the audited combined financial statements as of and for the year ended December 31, 2023 contained in Exhibit 99.1 to Amendment No.

2 to the Company’s Registration Statement on Form 10 as filed with the Securities and Exchange Commission (the " SEC " ) on March 11, 2024, which became effective on March 13, 2024 (the " Information Statement " ).

New Accounting Pronouncements

14 unchanged sentences

Unearned revenue primarily relates to revenue that is recognized over time for one-year software license contracts.

Approximately $ 240 million of the December 31, 2023 balance was recognized as revenue during the three months ended March 31, 2024, while approximately $ 205 million of the December 31, 2022 balance was recognized as revenue during the three months ended March 31, 2023.

Approximately $ 150 million and $ 390 million of the December 31, 2023 balance were recognized as revenue during the three and six months ended June 30, 2024, while approximately $ 155 million and $ 360 million of the December 31, 2022 balance were recognized as revenue during the three and six months ended June 30, 2023.

Operating Lease Revenue

Sales of software and rental includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the MedSurg segment), which was $ 146 million and $ 145 million for the three months ended March 31, 2024 and 2023, respectively.

Sales of software and rental includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the MedSurg segment), which was $ 148 million and $ 294 million for the three and six months ended June 30, 2024, and $ 153 million and $ 298 million for the three and six months ended June 30, 2023, respectively.

Customer Concentration

No customer accounted for more than 10% of the Company’s revenues for the three months ended March 31, 2024 or 2023.

Additionally, no customers accounted for more than 10% of accounts receivable as of March 31, 2024 and one customer accounted for approximately 10 % of the accounts receivable at December 31, 2023.

No customer accounted for more than 10% of the Company’s revenues for the three and six months ended June 30, 2024 or 2023.

Additionally, no customers accounted for more than 10% of accounts receivable as of June 30, 2024 and one customer accounted for approximately 10 % of the accounts receivable at December 31, 2023.

Goodwill and Intangible Assets

There was no goodwill recorded from acquisitions during the three months ended March 31, 2024.

There was no goodwill recorded from acquisitions during the six months ended June 30, 2024.

The goodwill balance by business segment follows:

2 unchanged sentences

Translation impact ( 47 ) ( 10 ) ( 1 ) ( 30 ) ( 88 )

Balance as of March 31, 2024 $ 3,648 $ 451 $ 872 $ 1,497 $ 6,468

Balance as of June 30, 2024 $ 3,638 $ 448 $ 872 $ 1,489 $ 6,447

Acquired Intangible Assets:

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets are as follows:

March 31, December 31,

June 30, December 31,

(Millions) 2024 2023

11 unchanged sentences

Total intangible assets — net $ 2,724 $ 2,902

In June 2024, the Company made the decision to start phasing out the use of a tradename within its Dental Solutions business.

This tradename, which was categorized as indefinite-lived as of December 31, 2023, has been reclassified to finite-lived as of June 30, 2024 in the table above.

The tradename will be amortized over the phase-out period and the expected amortization is included in the table below.

Amortization expense was as follows:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

(Millions) 2024 2023 2024 2023

Amortization expense $ 86 $ 92 $ 173 $ 184

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2024 is as follows:

Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2024 is as follows:

(Millions) Remainder of 2024 2025 2026 2027 2028 2029 After 2029

1 unchanged sentence

Other Current Liabilities

Other current liabilities included in the condensed combined balance sheets consist of the following:

March 31, December 31,

Other current liabilities included in the condensed consolidated and combined balance sheets consist of the following:

June 30, December 31,

(Millions) 2024 2023

2 unchanged sentences

Accrued rebates 142 206

Accrued interest 148 —

Other 472 262

Total other current liabilities $ 960 $ 677

Equity and Comprehensive Income Information

The table below presents the combined changes in equity for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31, 2024 and March 31, 2023

(Millions) Net Parent Investment Accumulated Other Comprehensive Income (Loss) Total

Balance at December 31, 2023 $ 12,003 $ ( 337 ) $ 11,666

Net income 237 — 237

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — ( 86 ) ( 86 )

Defined benefit pension adjustment — — —

Total other comprehensive income (loss), net of tax — ( 86 ) ( 86 )

Net transfers to 3M ( 7,431 ) ( 535 ) ( 7,966 )

Balance at March 31, 2024 $ 4,809 $ ( 958 ) $ 3,851

Balance at December 31, 2022 $ 12,239 $ ( 497 ) $ 11,742

Net income 293 — 293

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — 68 68

Defined benefit pension adjustment — — —

Total other comprehensive income (loss), net of tax — 68 68

Net transfers to 3M ( 433 ) — ( 433 )

Balance at March 31, 2023 $ 12,099 $ ( 429 ) $ 11,670

Property, Plant, and Equipment - Net

Property, plant and equipment, net consisted of the following:

June 30, December 31,

(Millions) 2024 2023

Property, plant and equipment - at cost

Buildings and leasehold improvements

Machinery and equipment

Construction in progress 414 320

Gross property, plant and equipment 3,465 3,338

Accumulated depreciation ( 1,928 ) ( 1,881 )

Property, plant and equipment - net $ 1,537 $ 1,457

Depreciation expense consisted of the following:

Three months ended June 30, Six months ended June 30,

(Millions) 2024 2023 2024 2023

Depreciation expense $ 40 $ 34 $ 84 $ 79

Comprehensive Income Information

Changes in Accumulated Other Comprehensive Income (Loss) by Component

The table below presents the changes in accumulated other comprehensive income (loss) attributable to Solventum ("AOCI"), including the reclassifications out of AOCI by component:

Three months ended March 31, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension Plans Adjustment Total Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2023, net of tax:

Three months ended June 30, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension Plans Cash Flow Hedging Total Accumulated Other Comprehensive Income (Loss)

Balance at March 31, 2024, net of tax:

$ ( 433 ) $ ( 525 ) $ — $ ( 958 )

6 unchanged sentences

Transfers from 3M, net of tax — 3 — 3

Balance at June 30, 2024, net of tax:

$ ( 432 ) $ ( 512 ) $ 1 $ ( 943 )

Three months ended June 30, 2023

(Millions) Cumulative Translation Adjustment Defined Benefit Pension Plans Total Accumulated Other Comprehensive Income (Loss)

Balance at March 31, 2023, net of tax:

$ ( 436 ) $ 7 $ ( 429 )

Three months ended March 31, 2023

Other comprehensive income (loss), before tax:

Amounts before reclassifications 22 — 22

Amounts reclassified out — — —

Total other comprehensive income (loss), before tax 22 — 22

Tax effect — — —

Total other comprehensive income (loss), net of tax 22 — 22

Transfers from 3M, net of tax — — —

Balance at June 30, 2023, net of tax:

$ ( 414 ) $ 7 $ ( 407 )

Six months ended June 30, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension Plans Cash Flow Hedging Total Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2023, net of tax:

$ ( 347 ) $ 10 $ — $ ( 337 )

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 123 ) — 2 ( 121 )

Amounts reclassified out 38 13 — 51

Total other comprehensive income (loss), before tax ( 85 ) 13 2 ( 70 )

Tax effect — ( 3 ) ( 1 ) ( 4 )

Total other comprehensive income (loss), net of tax ( 85 ) 10 1 ( 74 )

Transfers from 3M, net of tax — ( 532 ) — ( 532 )

Balance at June 30, 2024, net of tax:

$ ( 432 ) $ ( 512 ) $ 1 $ ( 943 )

Six months ended June 30, 2023

(Millions) Cumulative Translation Adjustment Defined Benefit Pension Plans Adjustment Total Accumulated Other Comprehensive Income (Loss)

8 unchanged sentences

Transfers from 3M, net of tax — — —

Balance at March 31, 2023, net of tax:

Balance at June 30, 2023, net of tax:

$ ( 414 ) $ 7 $ ( 407 )

The effective tax rate for the three months ended March 31, 2024 was 28.0 %, compared to 19.3 % for the three months ended March 31, 2023.

The Company's income tax provision through March 31, 2024 was prepared on a separate return basis.

The income tax provision post Spin-Off is prepared based on a stand-alone basis.

The effective tax rates for the three months ended June 30, 2024 and 2023 were 7.3 % and 22.3 %, respectively.

The decrease in our effective tax rate is primarily due to a favorable change in the jurisdictional mix of earnings.

The effective tax rates for the six months ended June 30, 2024 and 2023 were 23.3 % and 20.9 % , respectively.

The increase in our effective tax rate is primarily due to the tax impact of legal entity restructuring in connection with the Spin-Off in 2024.

2 unchanged sentences

tax jurisdictions, including Ireland, have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in fiscal 2024 or announced their plans to enact legislation in future years.

The Company's income tax provision for the three months ended March 31, 2024, reflects currently enacted legislation and guidance related to the OECD model rules.

The Company's income tax provision for the six months ended June 30, 2024, reflects currently enacted legislation and guidance related to the OECD model rules.

The Company's income tax provision or benefit for the interim periods is determined based on an estimated annual effective tax rate, adjusted for discrete items.

Because significant foreign earnings are generated by the Company's subsidiaries organized in jurisdictions with lower statutory tax rates, the Company's estimated annual effective tax rate may be materially impacted if earnings in these lower-tax jurisdictions fluctuate.

The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized based on evaluation of all available positive and negative evidence.

On the basis of this evaluation, the Company continues to maintain a valuation allowance to reduce its deferred tax assets to the amount realizable.

As of June 30, 2024 and December 31, 2023, valuation allowances were $ 21 million and $ 56 million, respectively.

The decrease is primarily due to separation-related adjustments in connection with the Spin-Off on April 1, 2024, which is reflected in the statements of changes in equity.

Long-Term Debt and Short-Term Borrowings

Carrying value includes the impact of debt issuance costs.

Long-term debt and short-term borrowings as of March 31, 2024 consisted of the following:

Long-term debt and short-term borrowings as of June 30, 2024 consisted of the following:

(Millions) Currency/ Fixed vs.

Floating Effective Interest Rate Final Maturity Date Carrying Value

Description March 31, 2024

Description June 30, 2024

$ 500 million eighteen month senior term loan credit facility

20 unchanged sentences

$ 1 billion aggregate principal amount of 5.45 % senior notes due 2027, $ 1.5 billion aggregate principal amount of 5.40 % senior notes due 2029, $ 1 billion aggregate principal amount of 5.45 % senior notes due 2031, $ 1.65 billion aggregate principal amount of 5.60 % senior notes due 2034, $ 1.25 aggregate principal amount of 5.90 % senior notes due 2054, and $ 0.5 billion aggregate principal amount of 6.00 % senior notes due 2064 (together the "Senior Notes").

Interest payments on the Senior Notes are due semi-annually until maturity, with the first payment due in August 2024.

The Company recorded $ 62 million of debt issuance costs related to the Senior Notes.

Debt issuance costs are presented as a reduction of debt in the condensed combined balance sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method.

Debt issuance costs are presented as a reduction of debt in the condensed consolidated and combined balance sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method.

In connection with the issuance of the senior notes, the Company entered into a registration rights agreement with the initial purchasers, pursuant to which the Company was obligated to use commercially reasonable efforts to file with the SEC and cause to become effective a registration statement with respect to an offer to exchange each series of senior notes for registered notes with terms that are substantially identical in all material respects to the notes of such series.

12 unchanged sentences

The Company intends to use the Credit Facilities for general corporate purposes.

At March 31, 2024, there are no amounts outstanding under the 5-year Revolving Credit Facility.

At June 30, 2024, there are no amounts outstanding under the 5-year Revolving Credit Facility.

On March 7, 2024, the Company drew on the Term Loan Credit Facilities in the amount of $ 1.48 billion.

3 unchanged sentences

Any such issuance will mature within 364 days from date of issue.

There was no commercial paper outstanding as of March 31, 2024.

There was no commercial paper outstanding as of June 30, 2024.

Future Maturities of Long-term Debt:

The contractual maturities of long-term debt for the periods subsequent to March 31, 2024 are as follows (in millions):

The contractual maturities of long-term debt for the periods subsequent to June 30, 2024 are as follows (in millions):

2024 2025 2026 2027 2028 2029 After 2029 Total

1 unchanged sentence

Financial Instruments Not Measured at Fair Value

At March 31, 2024, the estimated fair value of the Company’s Senior Notes was $ 8.4 billion compared to a carrying value of $ 8.3 billion.

At June 30, 2024, the estimated fair value of the Company’s Senior Notes was $ 8.3 billion compared to a carrying value of $ 8.3 billion.

The Company did not have any outstanding debt obligations at December 31, 2023.

12 unchanged sentences

and most remaining 3M sponsored non-U.S.

pension and postretirement plan obligations and assets were legally transferred to Solventum from 3M Company.

pension and postretirement plan obligations and assets were legally transferred to Solventum from 3M Company, except for certain assets held back within the 3M sponsored pension plan for regulatory purposes.

Assets not yet delivered from 3M sponsored pension plans are already recognized within the Company's pension assets.

These plans included the U.S.

3 unchanged sentences

As these plans are sponsored by Solventum, they are accounted for as single employer plans.

Therefore, the funded status is reflected in the condensed combined balance sheets, and the net periodic benefit costs are included in the condensed combined statements of income.

Therefore, the funded status is reflected in the condensed consolidated and combined balance sheets, and the net periodic benefit costs are included in the condensed consolidated and combined statements of income.

The Company has made deposits for its defined benefit plans with independent trustees.

Trust funds and deposits with insurance companies are maintained to provide pension benefits to plan participants and their beneficiaries.

In certain non-U.S.

jurisdictions, trust funds and deposits with insurance companies are maintained to provide pension benefits to plan participants and their beneficiaries.

There are no plan assets in the non-qualified plan due to its nature.

postretirement health care benefit plan, the Company has set aside amounts at least equal to annual benefit payments with an independent trustee.

The following tables include transfers during the first quarter of 2024 from 3M Company to Solventum of the benefit obligation and the fair value of plan assets as well as a summary of the related amounts recognized in the Company’s condensed combined balance sheets as of March 31, 2024.

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

(Millions) 2024 2024 2024

Change in benefit obligation

Transfers from 3M $ 1,850 $ 73 $ 241

Benefit obligation at March 31 $ 1,850 $ 73 $ 241

Change in plan assets

Transfers from 3M $ 1,808 68 $ 129

Fair value of plan assets at March 31 $ 1,808 $ 68 $ 129

Funded status at March 31 $ ( 42 ) $ ( 5 ) $ ( 112 )

Amounts recognized in the Condensed Combined Balance Sheet as of March 31, (Millions)

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

2024 2024 2024

Other assets $ — $ 2 $ —

Accrued benefit cost

Current liabilities ( 2 ) — ( 1 )

Non-current liabilities ( 40 ) ( 7 ) ( 111 )

Ending balance $ ( 42 ) $ ( 5 ) $ ( 112 )

Amounts recognized in accumulated other comprehensive (income) loss as of March 31, (Millions)

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

2024 2024 2024

Net actuarial loss (gain) $ 493 $ 15 $ 43

Prior service cost (credit) ( 2 ) — ( 14 )

Ending balance $ 491 $ 15 $ 29

The balance of amounts recognized for non-U.S.

plans in accumulated other comprehensive income (loss) as of March 31, 2024 in the preceding table is presented based on the foreign currency exchange rates on that date.

The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels.

The following table summarizes the total accumulated benefit obligations, the accumulated benefit obligations and fair value of plan assets for defined benefit pension plans with accumulated benefit obligations in excess of plan assets, and the projected benefit obligation and fair value of plan assets for defined benefit pension plans with projected benefit obligation in excess of plan assets as of March 31, 2024:

Qualified and Non-qualified Pension Plans

United States International

(Millions) 2024 2024

Accumulated benefit obligation $ 1,773 $ 63

Plans with accumulated benefit obligation in excess of plan assets

Accumulated benefit obligation $ 19 $ 5

Fair value of plan assets — 3

Plans with projected benefit obligation in excess of plan assets

Projected benefit obligation $ 1,850 $ 55

Fair value of plan assets 1,808 48

Weighted-Average Assumptions Used to Determine Benefit Obligations as of March 31, 2024:

Qualified and Non-qualified Pension Benefits Postretirement Benefits

Discount rate 5.23 % 5.20 %

Compensation rate increase 3.77 % N/A

For the plans transferred to Solventum during the first quarter of 2024, the Company used the discount rate as of March 31, 2024 to measure plan liabilities.

The discount rate reflects the current rate at which the associated liabilities could be effectively settled.

The Company sets its rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits.

The Company measures service cost and interest cost separately using the spot yield curve approach applied to each corresponding obligation.

Service costs are determined based on duration-specific spot rates applied to the service cost cash flows.

The interest cost calculation is determined by applying duration-specific spot rates to the year-by-year projected benefit payments.

The spot yield curve approach does not affect the measurement of the total benefit obligations as the change in service and interest costs offset in the actuarial gains and losses recorded in other comprehensive income.

During the three months ended March 31, 2024, the Company contributed $ 1 million to its defined benefit pension plans.

In 2024, the Company expects to contribute approximately $ 10 million to $ 15 million of cash to its defined benefit pension plans.

Future Pension Benefit Payments

The following table provides the estimated pension and postretirement benefit payments for the plans transferred from 3M during the three months ended March 31, 2024 that are payable from the plans to participants.

Qualified and Non-qualified Pension Benefits Postretirement Benefits

(Millions) United States International

2024 Remaining Benefit Payments $ 142 $ 2 $ 18

2025 Benefit Payments 147 3 19

2026 Benefit Payments 147 3 20

2027 Benefit Payments 147 4 20

2028 Benefit Payments 147 4 21

Next five years $ 709 $ 23 $ 98

Components of net periodic cost and other amounts recognized in other comprehensive (income) loss

3 unchanged sentences

and research and development.

Components of net periodic benefit cost and other supplemental information for the three months ended March 31, 2024 and 2023 follow:

Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2024 and 2023 follow:

Three months ended June 30,

Qualified and Non-qualified Pension Benefits

United States International Postretirement Benefits

6 unchanged sentences

Expected return on plan assets ( 34 ) — ( 5 ) — ( 2 ) —

Amortization of prior service benefit ( 1 ) — — — ( 1 ) —

Amortization of net actuarial loss 14 — — — 1 —

Total non-operating expense (benefit) 2 — — — 1 —

Total net periodic benefit cost (benefit) $ 9 $ — $ 5 $ — $ 2 $ —

Six months ended June 30,

Qualified and Non-qualified Pension Benefits

United States International Postretirement Benefits

(Millions) 2024 2023 2024 2023 2024 2023

Net periodic benefit cost (benefit)

Operating expense

Service cost $ 7 $ — $ 9 $ — $ 1 $ —

Non-operating expense

Interest cost 23 — 10 — 3 —

Expected return on plan assets ( 34 ) — ( 10 ) — ( 2 ) —

Amortization of prior service benefit ( 1 ) — — — ( 1 ) —

Amortization of net actuarial loss 14 — — — 1 —

Total non-operating expense (benefit) 2 — — — 1 —

Total net periodic benefit cost (benefit) $ 9 $ — $ 9 $ — $ 2 $ —

Prior to April 1, 2024, Solventum indirectly participated in 3M’s centrally managed hedging program, which utilizes a number of tools to manage currency risk including natural hedges such as pricing, productivity, hard currency, hard currency-indexed billings, and localizing source of supply.

3M also used financial hedges to mitigate currency risk.

During the quarter ended June 30, 2024, Solventum established its own hedging program.

Cash Flow Hedges - For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings.

Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Cash Flow Hedging - Foreign Currency Forward Contracts:

The Company enters into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies.

These transactions are designated as cash flow hedges.

The settlement or extension of these derivatives will result in reclassifications (from accumulated other comprehensive income) to earnings in the period during which the hedged transactions affect earnings.

Solventum may de-designate these cash flow hedge relationships in advance of the occurrence of the forecasted transaction.

The portion of gains or losses on the derivative instrument previously included in accumulated other comprehensive income for de-designated hedges remains in accumulated other comprehensive income until the forecasted transaction occurs or becomes probable of not occurring.

Changes in the value of derivative instruments after de-designation are recorded in earnings.

The maximum length of time over which Solventum hedges its exposure to the variability in future cash flows of the forecasted transactions is 36 months.

As of June 30, 2024, the Company had a balance of $ 1 million associated with the after-tax net unrealized gain associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

Based on exchange rates as of June 30, 2024 of the total after-tax net unrealized balance as of June 30, 2024, Solventum expects to reclassify approximately $ 1 million after-tax net unrealized gain over the next 12 months (with the impact offset by earnings/losses from underlying hedged items).

The amount of pretax gain (loss) recognized in other comprehensive income (loss) related to derivative instruments designated as cash flow hedges is provided in the following table.

Pretax Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivative

Three months ended June 30, Six months ended June 30,

(Millions) 2024 2023 2024 2023

Foreign currency forward contracts $ 2 $ — $ 2 $ —

Statement of Income Location and Impact of Cash Flow Derivative Instruments

There was no impact to income related to derivative instruments designated in cash flow hedging relationships in the three and six months ended June 30, 2024.

Location, Fair Value, and Gross Notional Amounts of Derivative Instruments

The following tables summarize the fair value of Solventum’s derivative instruments and their location in the condensed consolidated balance sheet.

Notional amounts below are presented at period end foreign exchange rates.

Gross Notional Amount Assets Liabilities

(Millions) Location Fair Value Amount Location Fair Value Amount

June 30, December 31, June 30, December 31, June 30, December 31,

2024 2023 2024 2023 2024 2023

Derivatives designated as hedging instruments

Foreign currency forward contracts $ 172 $ — Other current assets $ 2 $ — Other current liabilities $ — $ —

Foreign currency forward contracts — — Other assets — — Other liabilities — —

Total derivatives designated as hedging instruments $ 172 $ — $ 2 $ — $ — $ —

The Company’s derivative assets and liabilities within the scope of ASC 815, Derivatives and Hedging , are required to be recorded at fair value.

The Company’s derivatives that are recorded at fair value include foreign currency forward contracts.

Solventum has determined that foreign currency forward contracts will be considered level 2 measurements.

Solventum uses inputs other than quoted prices that are observable for the asset.

These inputs include foreign currency exchange rates and volatilities.

Derivative positions are primarily valued using standard calculations/models that use as their basis readily observable market parameters.

Industry standard data providers are Solventum’s primary source for forward and spot rate information for interest rates and currency rates, with resulting valuations periodically validated through third-party or counterparty quotes and a net present value stream of cash flows model.

Credit Risk and Offsetting of Assets and Liabilities of Derivative Instruments:

The Company is exposed to credit loss in the event of nonperformance by counterparties in forward contracts.

However, the Company’s risk is limited to the fair value of the instruments.

The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties.

Solventum enters into master netting arrangements with counterparties, which may allow each counterparty to net settle amounts owed between a Solventum entity and the counterparty as a result of multiple, separate derivative transactions.

The Company does not anticipate nonperformance by any of these counterparties.

Solventum has elected to present the fair value of derivative assets and liabilities within the Company’s condensed consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation.

Solventum determined that the impact of the amount of eligible offsetting derivative assets and liabilities was not material if it had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties.

For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period based on the Solventum entity that is a party to the transactions.

Derivatives not subject to master netting agreements are not eligible for net presentation.

For the periods presented, Solventum has not received cash collateral from derivative counterparties.

Commitments and Contingencies

19 unchanged sentences

The Company discloses significant legal proceedings even where liability is not probable or the amount of the liability is not estimable, or both, if the Company believes there is at least a reasonable possibility that a loss may be incurred.

Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each period, and whether a loss previously determined to not be reasonably estimable and/or not probable is now able to be reasonably estimated or has become

Where appropriate, the Company makes additions to or adjustments of its reasonably estimated losses and/or accruals.

As a result, the current accruals and/or estimates of loss and the estimates of the potential impact on the Company’s combined financial position, results of operations and cash flows for the legal proceedings and claims pending against the Company will likely change over time.

During the first quarter of 2024 and 2023, the Company recognized no legal charges and recognized $ 1 million of certain legal recoveries, respectively.

At both March 31, 2024 and December 31, 2023 accrued litigation charges were approximately $ 23 million.

As a result, the current accruals and/or estimates of loss and the estimates of the potential impact on the Company’s consolidated financial position, results of operations and cash flows for the legal proceedings and claims pending against the Company will likely change over time.

During the second quarter of 2024 and 2023, the Company recognized $ 5 million and $ 2 million in legal charges, respectively, and during the first six months of 2024 and 2023, the Company recognized $ 5 million and $ 1 million in legal charges, respectively.

At June 30, 2024 and December 31, 2023, accrued litigation charges were $ 28 million and $ 23 million, respectively.

Because litigation is subject to inherent uncertainties, and unfavorable rulings or developments could occur, the Company may ultimately incur charges substantially in excess of presently recorded liabilities, including with respect to matters for which no accruals are currently recorded because losses are not currently probable and reasonably estimable.

3 unchanged sentences

Such information may or may not lead the Company to determine that it is able to make a reasonable estimate as to a probable loss or range of loss in connection with a matter.

However, even when a loss or range of loss is not probable and reasonably estimable, developments in, or the ultimate resolution of, a matter could be material to the Company and could have a material adverse effect on the Company, its combined financial position, results of operations and cash flows.

In addition, future adverse rulings or developments, or settlements in, one or more matters could result in future changes to determinations of probable and reasonably estimable losses in other matters.

However, even when a loss or range of loss is not probable and reasonably estimable, developments in, or the ultimate resolution of, a matter could be material to the Company and could have a material adverse effect on the Company, its consolidated financial position, results of operations and cash flows.

In addition, future adverse rulings or developments, or

settlements in, one or more matters could result in future changes to determinations of probable and reasonably estimable losses in other matters.

Process for Disclosure and Recording of Insurance Receivables Related to Legal Proceedings

5 unchanged sentences

3M is a named defendant in over 7,200 lawsuits in the United States and one Canadian putative class action with a single named plaintiff, alleging that they underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger patient warming system.

Under the terms of the Separation and Distribution Agreement, dated as of March 31, 2024, by and between Solventum and 3M (the "Separation and Distribution Agreement"), Solventum has agreed to indemnify 3M for liabilities related to the Bair Hugger patient warming system, to manage the litigation, and pay for legal expenses.

Under the terms of the Separation and Distribution Agreement, dated as of March 31, 2024, by and between Solventum and 3M (the "Separation and Distribution Agreement"), Solventum has agreed to indemnify 3M for uninsured liabilities related to the Bair Hugger patient warming system, to manage the litigation, and pay for legal expenses.

The plaintiffs seek damages and other relief based on theories of strict liability, negligence, breach of express and implied warranties, failure to warn, design and manufacturing defect, fraudulent and/or negligent misrepresentation/concealment, unjust enrichment, and violations of various state consumer fraud, deceptive or unlawful trade practices and/or false advertising acts.

15 unchanged sentences

The MDL court denied plaintiffs’ April 2023 motion to disqualify the judge and magistrate judge overseeing the MDL.

The parties, working with the new mediator, agreed on a bellwether process, selecting 34 cases, with federal court trials to potentially begin in 2024 or early 2025.

The parties, working with the new mediator, agreed on a bellwether process, selecting 34 cases.

The MDL court transferred the non-Minnesota bellwether cases during April 2024.

In addition to the federal MDL cases, there are six state court cases relating to the Bair Hugger patient warming systems.

A case transferred to the Eastern District of Pennsylvania has been set for trial on December 16, 2024.

Eleven of the bellwether cases have now been voluntarily dismissed by plaintiffs.

In addition to the federal MDL cases, there are eight state court cases relating to the Bair Hugger patient warming systems.

Two are pending in Missouri state court and combine Bair Hugger product liability claims with medical malpractice claims.

One of the Missouri cases was tried in September and October of 2022;

One of the Missouri cases was tried in 2022;

the jury returned a verdict in 3M’s favor on all the claims.

The trial court denied plaintiff’s motion for a new trial, and plaintiffs have appealed.

The trial court denied plaintiff’s motion for a new trial, and the verdict was affirmed on appeal in June 2024.

The plaintiff has filed a request for further review by the Missouri Supreme Court.

The other Missouri case is scheduled for trial in September 2024.

1 unchanged sentence

It is set for trial in November 2024.

A Texas case that 3M removed to federal court was remanded to state court in January 2024, and a Pennsylvania case that 3M removed to federal court was remanded to state court in April 2024.

Finally, a putative class action has been filed in Ramsey County, Minnesota, seeking economic damages for the use of the Bair Hugger system in orthopedic surgeries of medically obese people in Minnesota from May 2017 to the present.

Discovery is underway and the case is scheduled to be ready for trial in the second quarter of 2025.

Three other state court cases have been resolved in 2023, including a Missouri state court case that was voluntarily dismissed in June 2023 and a Texas state court case that was voluntarily dismissed in September 2023.

Two cases (both in Montana) have been removed to federal court;

plaintiffs’ motions to remand are pending.

A Texas case that 3M removed to federal court was remanded to state court in January 2024, a Pennsylvania case was remanded to state court in April 2024, and two Montana cases were remanded to state court in June 2024.

Finally, a putative class action has been filed in Ramsey County, Minnesota, seeking economic damages for the use of the Bair Hugger system in knee and hip replacement surgeries involving medically obese people in Minnesota from May 2017 to the present.

Discovery is underway and the case is scheduled to be ready for trial in the fourth quarter of 2025.

3M had been named a defendant in 61 cases in Minnesota state court.

31 unchanged sentences

The KCI Defendants and relator-plaintiff have jointly requested that the court continue to hold in abeyance any hearing on the KCI Defendants’ pending Renewed Motion for Summary Judgment and any further proceedings in this case, to allow the parties to confer with counsel for the government and negotiate the remaining terms of the settlement agreement.

The KCI Defendants and the relator-plaintiff submitted an updated status report to the court during January 2024.

The KCI Defendants and the relator-plaintiff submitted an updated status report to the court during January 2024 and another status report in July 2024.

Under the terms of the Separation and Distribution Agreement, Solventum has agreed to indemnify 3M for liabilities related to this matter, to manage the litigation, and pay for related legal expenses.

For the matters described in this section for which a liability has been recorded, the amount recorded is included in the disclosed amounts in the preceding " Process for Disclosure and Recording of Liabilities Related to Legal Proceedings" section and are not material to the Company’s combined results of operations or financial condition.

For the matters described in this section for which a liability has been recorded, the amount recorded is included in the disclosed amounts in the preceding " Process for Disclosure and Recording of Liabilities Related to Legal Proceedings" section and are not material to the Company’s consolidated results of operations or financial condition.

The Company is not able to estimate a possible loss or range of possible loss in excess of the recorded liability at this time.

1 unchanged sentence

The Company has not issued any material financial guarantees of loans with third parties or other guarantee arrangements.

Furthermore, the Company does not disclose information on its product warranties, as management considers the balance immaterial to its combined results of operations and financial condition.

Furthermore, the Company does not disclose information on its product warranties, as management considers the balance immaterial to its consolidated results of operations and financial condition.

Earnings Per Share

3 unchanged sentences

This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off.

For the three months ended March 31, 2024 and 2023, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

For the three and six months ended June 30, 2023, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

For periods prior to the Spin-Off, it is assumed that there are no dilutive equity instruments as there were no equity awards of Solventum outstanding prior to the Spin-Off.

The computations for basic and diluted earnings per share follow:

Three months ended March 31, Three months ended March 31,

Three months ended June 30, Six months ended June 30,

(Amounts in millions, except per share amounts) 2024 2023 2024 2023

1 unchanged sentence

Weighted average common shares outstanding – basic

173.2 172.7 172.9 172.7

Dilution associated with stock-based compensation plans 0.3 — 0.2 —

Weighted average common shares outstanding – diluted 173.5 172.7 173.1 172.7

1 unchanged sentence

Diluted earnings per share $ 0.51 $ 1.86 $ 1.88 $ 3.56

Stock-Based Compensation

Prior to the Spin-Off, certain eligible employees were awarded incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units (RSUs), performance share units (PSUs) and other stock awards under 3M's Amended and Restated 2016 Long-Term Incentive Plan (3M Company Plan).

Stock-based compensation granted pursuant to the 3M Company Plan was based on 3M’s common stock.

In March 2024, 3M's Board of Directors approved the 2024 Long-Term Incentive Plan (Solventum 2024 Plan) providing for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, RSUs, PSUs, and other stock or cash-based awards to eligible employees and non-employee directors.

Stock-based compensation granted pursuant to the 2024 Long-Term Incentive Plan is based on Solventum's stock.

The maximum shares that can be issued under the Solventum 2024 Plan is 13,000,000 shares.

In connection with the Spin-Off, all awards granted under the 3M Company Plan for Solventum employees were converted into equivalent awards under the Solventum 2024 Plan subsequent to the Spin-Off in April 2024.

This stock award modification at Spin-Off resulted in expense of $ 19 million in the three months ended June 30, 2024.

Stock-Based Compensation Expense

Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, RSUs, and PSUs, are provided in the following table.

Capitalized stock-based compensation amounts were not material.

Three months ended June 30, Six months ended June 30,

(Millions) 2024 2023 2024 2023

Cost of sales $ 8 $ 2 $ 9 $ 6

Selling, general and administrative expenses 36 4 39 14

Research, development and related expenses 12 2 12 6

Stock-based compensation expenses 56 8 60 26

Income tax benefits ( 10 ) ( 2 ) ( 8 ) ( 6 )

Stock-based compensation expenses (benefits), net of tax $ 46 $ 6 $ 52 $ 20

Related Parties

Related Party Transactions

Solventum has not entered into any related party transactions apart from those described below related to 3M.

Solventum has not historically entered into material arrangements with other businesses of 3M.

Related Party Transactions Prior to Spin-Off

Prior to the Spin-Off, the Company participated in centralized 3M treasury programs.

This arrangement is not reflective of the manner in which the Company would have financed its operations had it been a standalone business separate from 3M during the periods presented.

All adjustments relating to certain transactions among the Company and 3M, which include the transfer of the balance of cash to and from 3M, transfer of the balance of cash held in centralized cash management arrangements to and from 3M, and pushdown of all costs of doing business that were paid on behalf of the Company by 3M, are excluded from the asset and liability balances in the unaudited condensed combined balance sheets and have instead been reported within net parent investment as a component of equity .

This arrangement was not reflective of the manner in which the Company would have financed its operations had it been a standalone business separate from 3M during the periods presented prior to April 1, 2024.

All adjustments relating to certain transactions among the Company and 3M, which include the transfer of the balance of cash to and from 3M, transfer of the balance of cash held in centralized cash management arrangements to and from 3M, and pushdown of all costs of doing business that were paid on behalf of the Company by 3M, are excluded from the asset and liability balances in the condensed combined balance sheets and have instead been reported within Net parent investment as a component of equity .

Corporate Allocations

The unaudited condensed combined statements of income include general corporate expenses of 3M for services provided by 3M for certain corporate and shared service functions that are provided on a centralized basis, including the use of shared assets.

Expenses have been included on a direct usage basis where costs are specifically identifiable to Solventum or allocated primarily based on the Company’s pro rata proportion of revenue.

Management believes that the expense allocations have been determined on a basis that is a reasonable reflection of the utilization of services provided for or the benefit received by the Company during each of the periods presented.

The amounts that would have been, or will be incurred, on a standalone basis could materially differ from the amounts allocated due to economies of scale, a requirement for more or fewer employees, or other factors.

The condensed combined statements of income for periods prior to April 1, 2024 include general corporate expenses of 3M for services provided by 3M for certain corporate and shared service functions that were provided on a centralized basis, including the use of shared assets.

Expenses had been included on a direct usage basis where costs were specifically identifiable to Solventum or allocated based on the Company’s pro rata proportion of 3M's revenue.

Management believes that the expense allocations were determined on a basis that was a reasonable reflection of the utilization of services provided for or the benefit received by the Company during each of the periods presented prior to April 1, 2024.

The amounts that would have been incurred on a standalone basis could materially differ from the amounts allocated.

Management does not believe, however, that it is practicable to estimate what these expenses would have been had the Company operated as an independent entity, including any expenses associated with obtaining any of these services from unaffiliated entities.

3M expense allocations were recorded in the unaudited condensed combined statements of income within the following captions:

Three months ended March 31,

There was no expense allocation activity after the April 1, 2024 Spin-Off date.

3M expense allocations were recorded in the condensed combined statements of income within the following captions:

Three months ended June 30, Six months ended June 30,

(Millions) 2023 2024 2023

4 unchanged sentences

Total $ 226 $ 220 $ 455

Related Party Transactions After Spin-Off

Separation and Distribution Agreement and Other Related Party Transactions with 3M

In connection with the Spin-Off on April 1, 2024, the Company entered into or adopted several agreements that provide a framework for Solventum's relationship with 3M after the separation and distribution.

These include, but are not limited to, the following which had activity during the second quarter of 2024:

• Separation and Distribution Agreement - The separation and distribution agreement contains key provisions related to the separation of Solventum from 3M, including the transfer of assets and assumptions of liabilities.

In connection with this agreement, certain assets and liabilities included in the Company's condensed combined balance sheet as of March 31, 2024 were retained by 3M and certain assets and liabilities not included in the Company's condensed combined balance sheet as of March 31, 2024 were transferred to Solventum as of the date of separation.

Separation related adjustments resulted in a decrease to net assets and total equity of $ 1.1 billion and are reflected in the "Net transfers to 3M" line item of the condensed consolidated and combined statements of changes in equity.

The impact on net assets primarily represent liabilities payable to 3M for services received prior to Spin-Off as well as cash and accounts receivable retained by 3M.

• Transition Agreements - Transition services agreements include services that 3M will provide to Solventum and its affiliates, and Solventum and its affiliates will provide to 3M and its affiliates, on an interim, transitional basis.

1) Transition services agreement.

Includes various services, including, but not limited to, information technology support and access, logistics services, certain finance support functions, compliance reporting,

human resources and toxicology laboratory support services.

The transition services agreement has an overall term of two years .

2) Transition distribution services agreement.

Provides that 3M and its affiliates will retain inventories of and purchase certain Solventum products from Solventum and its subsidiaries and distribute those products to Solventum's customers.

The transition distribution services agreement has an overall term of two years , with shorter terms for individual countries.

3) Transition contract manufacturing agreement.

Solventum and 3M will manufacture certain products of the other party at specified manufacturing sites and will supply such products to the other party, in each case on a transitional basis to allow for the orderly exit of production at the supplier site and relocation.

The transition contract manufacturing agreement has an overall term of three years , with the terms of individual services ranging from eighteen to thirty-six months .

For the three months ended June 30, 2024, Solventum recognized $ 88 million in expense related to transition agreements between the Company and 3M and its affiliates.

• Tax Matters Agreement - The agreement governs the parties’ respective rights, responsibilities and obligations with respect to taxes (including responsibility for taxes, entitlement to refunds, allocation of tax attributes, preparation of tax returns, control of tax contests and other tax matters).

In addition, the tax matters agreement imposes certain restrictions on Solventum and its subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the distribution and certain related transactions.

• Employee Matters Agreement - The agreement allocates liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs, and other related matters.

The employee matters agreement provides that, unless otherwise specified, each party will be responsible for liabilities associated with current and former employees of such party and its subsidiaries.

qualified and non-qualified defined benefit pension plans, Solventum established plans that mirror the corresponding 3M plans and assumed all obligations under 3M’s plans for the accrued benefits of current and former Solventum employees.

The employee matters agreement also governs the terms of equity-based awards granted by 3M prior to separation.

• Real Estate License Agreements - Solventum or one of its affiliates, as licensee, has entered into certain real estate license agreements with 3M or one of its affiliates, as licensor, pursuant to which Solventum will be able to continue to use certain premises owned or leased by 3M for a limited period of time following the distribution date.

Pursuant to the real estate license agreements, 3M will provide customary building services to the licensee consistent with the property’s use prior to the separation, including, without limitation, basic utilities, janitorial and trash removal services, maintenance services and employee amenities.

The terms of the real estate license agreements are generally two years or less.

• Master Supply Agreements - 3M and Solventum entered into master supply agreements in connection with the separation under which each agrees to supply the other with certain products.

The term of the master supply agreements will initially be three years , which will extend automatically, with the length of the term extension subject to the parties' ability to identify a third-party supplier, and the ability for such third-party supplier to provide validated production samples.

Revenue recognized from sales to 3M and related cost of sales were $ 10 million and $ 8 million, respectively, for both the three and six months ended June 30, 2024.

Related Party Transactions

The Company had the following transactions with 3M and its affiliates, primarily in connection with the Transition Services Agreement, Transition Distribution Services Agreement, Transition Contract Manufacturing Agreements and Master Supply Agreements, reported on the Company's condensed consolidated and combined financial statements:

Three months ended June 30, Six months ended June 30,

(Amounts in millions) 2024 2023 2024 2023

Net sales of product $ 10 $ — $ 10 $ —

Cost of product 30 — 30 —

Selling, general and administrative expenses 72 — 72 —

Research and development expenses

Current amounts due from and due to 3M under various agreements described above are recognized within the "Due from related parties" and "Due to related parties", as applicable, in the condensed consolidated and combined financial statements.

Non-current amounts due to 3M were approximately $ 60 million at June 30, 2024 and were recognized in "Other liabilities" in the consolidated balance sheet.

Net Parent Investment

Net transfers to 3M are included within Net Parent investment from the changes in equity within Note 5 to the unaudited condensed combined financial statements and within financing activities in the unaudited condensed combined statements of cash flows and represent the net effect of transactions between the Company and 3M.

The reconciliation of net transfers to 3M between the combined changes in equity located in Note 5 and the unaudited condensed combined statements of cash flows are as follows:

Three months ended March 31,

Net transfers to 3M are included within Net parent investment in the condensed consolidated and combined statements of changes in equity and within financing activities in the condensed combined statements of cash flows and represent the net effect of transactions between the Company and 3M.

The reconciliation of net transfers to 3M between the condensed consolidated and combined changes in equity and the condensed consolidated and combined statements of cash flows are as follows:

Three months ended June 30, Six months ended June 30,

(Millions) 2024 2023 2024 2023

Net transfers to 3M on the combined changes in equity (Note 5) $ ( 7,431 ) $ ( 433 )

Net transfers to 3M on the condensed consolidated and combined changes in equity

$ ( 1,134 ) $ ( 284 ) $ ( 8,571 ) $ ( 717 )

Stock compensation expense — ( 8 ) ( 4 ) ( 26 )

1 unchanged sentence

Net balances transferred from 3M $ 738 $ — $ 333 $ —

Net transfers to 3M on the condensed combined statements of cash flows $ ( 7,851 ) $ ( 460 )

Net transfers to 3M on the condensed consolidated and combined statements of cash flows

$ ( 396 ) $ ( 301 ) $ ( 8,247 ) $ ( 761 )

Business Segments

7 unchanged sentences

No operating segments have been aggregated to form reportable segments.

Corporate and Unallocated includes amortization of acquired intangible assets, restructuring related charges, costs or benefits from the capitalization of manufacturing variances and other net costs that the Company chose not to allocate directly to its business segments.

Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, Spin-Off and separation related costs and other net costs that the Company chose not to allocate directly to its business segments.

Spin-Off and separation related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone Company, including system implementations, manufacturing relocation, legal entity separation, certain equity awards granted as part of the Spin-Off, profit mark-ups on transition service arrangements with 3M and other one-time costs.

Corporate and Unallocated also includes sales and cost of sales related to products supplied to 3M and other supply agreements related to legacy 3M business and assumed by the Company at Spin-Off.

Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

3 unchanged sentences

Business Segment Information

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

Net Sales (Millions)

2024 2023 2024 2023

MedSurg $ 1,162 $ 1,161 $ 2,281 $ 2,284

4 unchanged sentences

Total Company $ 2,081 $ 2,076 $ 4,097 $ 4,087

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

Operating Performance (Millions)

2024 2023 2024 2023

MedSurg $ 214 $ 269 $ 435 $ 522

11 unchanged sentences

Income before income taxes $ 96 $ 413 $ 425 $ 776

Subsequent Events

On April 1, 2024, the Spin-Off was completed through the Distribution of approximately 80.1 % of outstanding shares of the Company to 3M shareholders who held 3M stock as of the close of business on March 18, 2024, the record date of the Distribution.

As a result of the Distribution, 3M shareholders received one share of the Company's common stock for every four shares of 3M common stock.

On April 1, 2024, the Company began trading as an independent, publicly traded company under the stock symbol "SOLV" on the New York Stock Exchange.

Subsequent to the Spin-Off and under the terms of the Separation and Distribution Agreement ("SDA"), the Company anticipates making approximately $ 400 million of cash payments to complete the Spin-Off.

The Company expects that payment activity under the SDA will be substantially complete by June 30, 2024.

Upon completing all required cash transfers under the SDA we expect to retain approximately $ 600 million of the Company's reported cash balance as of March 31, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements