What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-09 · 157 added, 125 removed, 653 unchanged (30% of the section changed)

2 unchanged sentences

Condensed Consolidated and Combined Statements of Income

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

Three months ended September 30, Nine months ended September 30,

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

23 unchanged sentences

Condensed Consolidated and Combined Statements of Comprehensive Income

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

Three months ended September 30, Nine months ended September 30,

(Millions) 2024 2023 2024 2023

2 unchanged sentences

Cumulative translation adjustment 179 ( 134 ) 94 ( 44 )

Defined benefit pension and postretirement plans adjustment 10 — 10 —

Defined benefit pension

Cash flow hedging instruments ( 11 ) — ( 10 ) —

4 unchanged sentences

Condensed Consolidated and Combined Balance Sheets

June 30, December 31,

September 30, December 31,

(Millions) 2024 2023

15 unchanged sentences

Current liabilities

Short-term borrowings and current portion of long-term debt $ 300 $ —

Accounts payable 560 477

10 unchanged sentences

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

Shares issued and outstanding - June 30, 2024:

Shares issued and outstanding - September 30, 2024:

Shares issued and outstanding - December 31, 2023:

2 unchanged sentences

Net parent investment — 12,003

Accumulated other comprehensive income (loss) — net ( 943 ) ( 337 )

Accumulated other comprehensive income (loss)

( 765 ) ( 337 )

Total equity 3,192 11,666

3 unchanged sentences

Condensed Consolidated and Combined Statements of Changes in Equity

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

Three Months Ended September 30, 2024 and September 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

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

Net income — — — 122 — — 122

7 unchanged sentences

Stock-based compensation — — 27 — — — 27

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

Common stock for tax withholding obligations

— — ( 2 ) — — — ( 2 )

Balance at September 30, 2024 173 $ 2 $ 3,744 $ 211 $ — $ ( 765 ) $ 3,192

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

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

Net income — — — — 460 — 460

4 unchanged sentences

Net transfers to 3M — — — — ( 473 ) — ( 473 )

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

Balance at September 30, 2023 — $ — $ — $ — $ 12,123 $ ( 541 ) $ 11,582

Solventum Corporation

Condensed Consolidated and Combined Statements of Changes in Equity, Continued

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

Nine Months Ended September 30, 2024 and September 30, 2023

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

9 unchanged sentences

Stock-based compensation — — 83 — — — 83

Common stock for tax withholding obligations

— — ( 2 ) — — — ( 2 )

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

173 2 3,663 — ( 3,665 ) — —

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

Balance at September 30, 2024 173 $ 2 $ 3,744 $ 211 $ — $ ( 765 ) $ 3,192

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

2 unchanged sentences

Cumulative translation adjustment — — — — — ( 44 ) ( 44 )

Defined benefit pension adjustment — — — — — — —

Defined benefit pension

— — — — — — —

Total other comprehensive income (loss), net of tax — — — — — ( 44 ) ( 44 )

Net transfers to 3M — — — — ( 1,190 ) — ( 1,190 )

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

Balance at September 30, 2023 — $ — $ — $ — $ 12,123 $ ( 541 ) $ 11,582

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

1 unchanged sentence

Condensed Consolidated and Combined Statements of Cash Flows

Six months ended June 30,

Nine months ended September 30,

(Millions) 2024 2023

3 unchanged sentences

Depreciation and amortization 405 422

Postretirement benefit plan expense 19 21

Pension and postretirement benefit expense

Stock-based compensation expense 87 32

Gain on business divestitures — ( 56 )

Deferred income taxes ( 93 ) ( 99 )

9 unchanged sentences

Purchases of property, plant and equipment ( 253 ) ( 202 )

Proceeds from sale of business — 60

Net cash used in investing activities

( 253 ) ( 142 )

Cash Flows from Financing Activities

Repayment of debt ( 200 ) —

Net transfers to 3M ( 8,247 ) ( 1,248 )

1 unchanged sentence

Other — net 8 2

Net cash provided by (used in) financing activities 66 ( 761 )

Net cash used in financing activities

( 136 ) ( 1,246 )

Effect of exchange rate changes on cash and cash equivalents 1 1

18 unchanged sentences

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, 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.

Securities and Exchange Commission (“SEC”) and present the historical results of operations, and comprehensive income for the three and nine months ended September 30, 2024 and 2023, cash flows for the nine months ended September 30, 2024 and 2023, and the financial position as of September 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.

1 unchanged sentence

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 .

Effective April 1, 2024, the Company’s financial statements are presented on a consolidated basis, as the Spin-Off 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 .

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.

2 unchanged sentences

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 " ).

The unaudited condensed consolidated and combined financial statements and related footnotes as of and for the three and nine months ended September 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 SEC on March 11, 2024, which became effective on March 13, 2024 (the “ Information Statement ” ).

New Accounting Pronouncements

5 unchanged sentences

Requires public entities to expand on segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

Year-end December 31, 2024 The Company is currently assessing the impact that the updated standard will have on financial statement disclosures.

Year-end December 31, 2024 The Company has assessed the impact that the updated standard will have on financial statement disclosures and will include expanded disclosures within the business segment footnote in the Company's 2024 Annual Report on Form 10-K.

2023-09, Income Taxes (Topic 740):

6 unchanged sentences

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

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.

Approximately $ 110 million and $ 500 million of the December 31, 2023 balance were recognized as revenue during the three and nine months ended September 30, 2024, respectively, while approximately $ 115 million and $ 475 million of the December 31, 2022 balance were recognized as revenue during the three and nine months ended September 30, 2023, respectively.

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 $ 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.

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 $ 442 million for the three and nine months ended September 30, 2024, and $ 160 million and $ 458 million for the three and nine months ended September 30, 2023, respectively.

Customer Concentration

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.

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

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

Goodwill and Intangible Assets

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

There was no goodwill recorded from acquisitions during the nine months ended September 30, 2024.

The goodwill balance by business segment follows:

2 unchanged sentences

Translation impact 46 3 1 7 57

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

Balance as of September 30, 2024 $ 3,731 $ 461 $ 874 $ 1,526 $ 6,592

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:

June 30, December 31,

September 30, December 31,

(Millions) 2024 2023

12 unchanged sentences

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.

This tradename, which was categorized as indefinite-lived as of December 31, 2023, has been reclassified to finite-lived and is being amortized over the expected phase-out period.

Amortization expense was as follows:

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

Three months ended September 30, Nine months ended September 30,

(Millions) 2024 2023 2024 2023

Amortization expense $ 88 $ 92 $ 261 $ 276

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

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

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

2 unchanged sentences

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

June 30, December 31,

September 30, December 31,

(Millions) 2024 2023

1 unchanged sentence

Accrued compensation $ 251 $ 209

Accrued taxes

Accrued rebates

4 unchanged sentences

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

June 30, December 31,

September 30, December 31,

(Millions) 2024 2023

7 unchanged sentences

Depreciation expense consisted of the following:

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

Three months ended September 30, Nine months ended September 30,

(Millions) 2024 2023 2024 2023

2 unchanged sentences

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 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:

The table below presents the changes in accumulated other comprehensive income (loss) (“AOCI”), including the reclassifications out of AOCI by component:

Three months ended September 30, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension

Cash Flow Hedging Total Accumulated Other Comprehensive Income (Loss)

Balance at June 30, 2024, net of tax:

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

6 unchanged sentences

Transfers from 3M, net of tax — — — —

Balance at June 30, 2024, net of tax:

Balance at September 30, 2024, net of tax:

$ ( 253 ) $ ( 502 ) $ ( 10 ) $ ( 765 )

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:

Three months ended September 30, 2023

(Millions) Cumulative Translation Adjustment Defined Benefit Pension

Total Accumulated Other Comprehensive Income (Loss)

Balance at June 30, 2023, net of tax:

$ ( 414 ) $ 7 $ ( 407 )

6 unchanged sentences

Transfers from 3M, net of tax — — —

Balance at June 30, 2023, net of tax:

Balance at September 30, 2023, net of tax:

$ ( 548 ) $ 7 $ ( 541 )

Six months ended June 30, 2024

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

Nine months ended September 30, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension

Cash Flow Hedging Total Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2023, net of tax:

7 unchanged sentences

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

Balance at June 30, 2024, net of tax:

Balance at September 30, 2024, net of tax:

$ ( 253 ) $ ( 502 ) $ ( 10 ) $ ( 765 )

Six months ended June 30, 2023

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

Nine months ended September 30, 2023

(Millions) Cumulative Translation Adjustment Defined Benefit Pension

Total Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2022, net of tax:

7 unchanged sentences

Transfers from 3M, net of tax — — —

Balance at June 30, 2023, net of tax:

Balance at September 30, 2023, net of tax:

$ ( 548 ) $ 7 $ ( 541 )

Additional details on the amounts reclassified from accumulated other comprehensive income (loss) into consolidated income include:

• Cumulative translation adjustment:

amounts were reclassified into other expense (income), net and were related to charges associated with the substantial liquidation of foreign operations completed as part of our separation from 3M.

• Defined benefit pension plans adjustment:

amounts were reclassified into other expense (income), net (see Note 9).

• The tax effects, if applicable, associated with these reclassifications were reflected in provision for income taxes.

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.

The effective tax rates for the three months ended September 30, 2024 and 2023 were 26.9 % and 8.0 %, respectively.

The prior period’s lower effective tax rate is primarily due to the tax benefit recognized as a result of the expiration of the statute of limitations on uncertain tax positions.

The effective tax rates for the nine months ended September 30, 2024 and 2023 were 24.3 % and 15.8 %, respectively.

The prior period’s lower effective tax rate is primarily due to the tax benefit recognized as a result of the expiration of the statute of limitations on uncertain tax positions.

In 2021, the Organisation for Economic Co-operation and Development (“OECD”) announced Pillar Two Model Rules which call for the taxation of large multinational corporations at a global minimum tax rate of 15%.

Many non-U.S.

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 six months ended June 30, 2024, reflects currently enacted legislation and guidance related to the OECD model rules.

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

The Company’s income tax provision for the nine months ended September 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.

2 unchanged sentences

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.

As of September 30, 2024 and December 31, 2023, valuation allowances were $ 22 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 condensed consolidated and combined 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 June 30, 2024 consisted of the following:

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

(Millions) Currency/ Fixed vs.

Floating Effective Interest Rate Final Maturity Date Carrying Value

Description June 30, 2024

$ 500 million eighteen month senior term loan credit facility

Floating Final Maturity Date Carrying Value

Description September 30, 2024

Eighteen month senior term loan credit facility

USD Floating 2025 $ 300

$ 1 billion three year senior term loan credit facility

Three year senior term loan credit facility

USD Floating 2027 979

16 unchanged sentences

On February 27, 2024, the Company issued six series of senior notes with a combined aggregate principal amount of $ 6.9 billion:

$ 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.

1 unchanged sentence

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.

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 is 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.

The Senior Notes were offered as part of the financing for the Spin-Off.

In connection with the consummation of the Spin-Off, Solventum 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 any amounts retained in order to achieve the $ 600 million retained cash target.

The senior notes were initially fully and unconditionally guaranteed on a senior unsecured basis by 3M.

Such guarantees of the senior notes were automatically and unconditionally terminated upon the completion of the Spin-Off.

The Company’s senior notes are governed by an indenture and supplemental indenture between the Company and a trustee (collectively, the " Indenture " ).

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

The Senior Notes are governed by an indenture and supplemental indenture between the Company and a trustee (collectively, the “ Indenture ” ).

The Indenture contains certain customary affirmative and negative covenants, including restrictions on the Company’s ability to consolidate, merge, convey, transfer or lease substantially all of its assets.

3 unchanged sentences

• a five year senior unsecured revolving credit facility in an aggregate committed amount of $ 2.0 billion expiring in 2029 (the “ 5-year Revolving Credit Facility”);

• an eighteen month senior unsecured term loan credit facility in the aggregate principal amount of $ 500 million and a three year senior unsecured term credit loan facility in the aggregate principal amount of $ 1.0 billion (together the " Term Loan Credit Facilities " , and together with the 5-Year Revolving Credit Facility, the "Credit Facilities").

• an eighteen month senior unsecured term loan credit facility in an aggregate principal amount of $ 500 million and a three year senior unsecured term credit loan facility in an aggregate principal amount of $ 1.0 billion (together, the “ Term Loan Credit Facilities ” , and together with the 5-Year Revolving Credit Facility, the “Credit Facilities”).

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

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

At September 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.

These Term Loan Credit Facilities have a floating interest rate based on a Secured Overnight Financing Rate (“SOFR”) index.

In August 2024, the Company repaid $ 200 million of the aggregate principal amount outstanding under the eighteen month senior unsecured term loan credit facility.

Commercial Paper

On March 4, 2024, the Company entered into a commercial paper program that allows Solventum to issue up to $ 2.0 billion aggregate principal amount of short-term notes to finance short-term liabilities.

On March 4, 2024, the Company entered into a commercial paper program that allows it to issue up to $ 2.0 billion aggregate principal amount of short-term notes to finance short-term liabilities.

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

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

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

Future Maturities of Long-term Debt:

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

Maturities of long-term debt in the table below reflect the impact of repayment such that total maturities equal the contractual value of long-term debt net of amounts repaid as of September 30, 2024.

The maturities of long-term debt for the periods subsequent to September 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 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 fair values of cash equivalents, accounts receivable, and accounts payable approximated carrying values because of the short-term nature of these instruments.

At September 30, 2024, the estimated fair value of the Company’s long-term debt obligations, comprised of both Senior Notes and Term Loan Credit Facilities with current portions excluded, was $ 8.1 billion compared to a carrying value of $ 7.8 billion.

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

1 unchanged sentence

The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts.

Because there is no active market for trading outstanding term loans, the fair values of the Term Loan Credit Facilities are estimated to be equal to their respective carrying values.

Pension and Postretirement Benefit Plans

9 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, except for certain assets held back within the 3M sponsored pension plan for regulatory purposes.

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

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

2 unchanged sentences

employees who reach a retirement age while employed by the Company and were employed prior to January 1, 2016.

Additionally, seven international plans covering employees in four countries were transferred to Solventum from 3M Company during March 2024.

Additionally, seven international plans covering employees in four countries were transferred to Solventum from 3M in March 2024.

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

10 unchanged sentences

and research and development.

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,

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

Three months ended September 30,

Qualified and Non-qualified Pension Benefits

11 unchanged sentences

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

Six months ended June 30,

Nine months ended September 30,

Qualified and Non-qualified Pension Benefits

13 unchanged sentences

3M also used financial hedges to mitigate currency risk.

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

After Spin-Off, the Company 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.

8 unchanged sentences

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).

As of September 30, 2024, the Company had a balance of $ 10 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

Of the total after-tax net unrealized balance as of September 30, 2024, Solventum expects to reclassify to earnings approximately $ 7 million after-tax net unrealized loss over the next 12 months based on exchange rates as of September 30, 2024.

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,

Three months ended September 30, Nine months ended September 30,

(Millions) 2024 2023 2024 2023

Foreign currency forward contracts $ ( 15 ) $ — $ ( 13 ) $ —

Derivatives Not Designated as Hedging Instruments - Derivatives not designated as hedging instruments include foreign currency contracts to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances.

These derivative instruments are not designated in a hedging relationship;

therefore, fair value gains and losses on these contracts are recorded in earnings.

The Company does not hold or issue derivative financial instruments for trading purposes.

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.

There was an immaterial impact to income related to both derivative instruments designated in cash flow hedging relationships and those not designated as hedging instruments in the three and nine months ended September 30, 2024.

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

3 unchanged sentences

(Millions) Location Fair Value Amount Location Fair Value Amount

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

September 30, December 31, September 30, December 31, September 30, December 31,

2024 2023 2024 2023 2024 2023

3 unchanged sentences

Total derivatives designated as hedging instruments $ 389 $ — $ — $ — $ 11 $ —

Derivatives not designated as hedging instruments

Foreign currency forward contracts $ 18 $ — Other current assets $ — $ — Other current liabilities $ 1 $ —

Total derivatives not designated as hedging instruments

$ 18 $ — $ — $ — $ 1 $ —

Total derivative instruments

$ 407 $ — $ — $ — $ 12 $ —

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.

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

Solventum determines fair value using observable inputs including foreign currency exchange rates.

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

33 unchanged sentences

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.

During the third quarter of 2024 and 2023, the Company recognized $ 3 million and no legal charges, respectively.

During the first nine months of 2024 and 2023, the Company recognized $ 8 million and $ 1 million in legal charges, respectively.

During the third quarter of 2024, the Company made a payment of $ 6 million related to a legal settlement, which reduced the accrued litigation balance.

At September 30, 2024 and December 31, 2023, accrued litigation charges were $ 25 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.

4 unchanged sentences

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.

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

13 unchanged sentences

Plaintiffs also appealed a 2018 jury verdict in favor of 3M in the first bellwether trial in the MDL and appealed the dismissal of another bellwether case.

A panel of the appellate court in August 2021 reversed the district court’s exclusion of the plaintiffs’ causation experts and the grant of summary judgment for 3M.

In August 2021, a panel of the appellate court reversed the district court’s exclusion of the plaintiffs’ causation experts and the grant of summary judgment for 3M.

3M sought further appellate en banc review by the full Eighth Circuit court.

5 unchanged sentences

Mediation sessions took place in May and August 2022 without success in resolving the litigation.

The MDL court in 2023 assigned a new mediator to facilitate discussions of the litigation and possible resolution.

In 2023, the MDL assigned a new mediator to facilitate discussions of the litigation and possible resolution.

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

1 unchanged sentence

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

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.

Bellwether cases are set for trial beginning in April 2025.

Fifteen 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.

5 unchanged sentences

The other Missouri case is scheduled for trial in September 2025.

There is one case in Etowah County, Alabama that combines Bair Hugger product liability claims with medical malpractice claims.

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, a Pennsylvania case was remanded to state court in April 2024, and two Montana cases were remanded to state court in June 2024.

There is one case in Etowah County, Alabama that combines Bair Hugger product liability claims with medical malpractice claims that has been settled in principle.

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 with a trial date in April 2026, 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.

33 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 and another status report in July 2024.

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

6 unchanged sentences

Earnings Per Share

Prior to the completion of the Spin-Off from 3M, the Company had no common shares issued and outstanding.

Prior to the completion of the Spin-Off, the Company had no common shares issued and outstanding.

On April 1, 2024, there were 172,709,505 shares of Solventum common stock issued and outstanding as part of the Distribution.

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

For the three and nine months ended September 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 June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

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

13 unchanged sentences

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.

This stock award modification at Spin-Off resulted in expense of $ 20 million in the nine months ended September 30, 2024.

Stock-Based Compensation Expense

1 unchanged sentence

Capitalized stock-based compensation amounts were not material.

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

Three months ended September 30, Nine months ended September 30,

(Millions) 2024 2023 2024 2023

4 unchanged sentences

Income tax benefits ( 5 ) ( 2 ) ( 13 ) ( 8 )

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

Stock-based compensation expenses, net of tax

$ 22 $ 4 $ 74 $ 24

Related Parties

9 unchanged sentences

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.

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

There was no expense allocation activity after April 1, 2024.

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,

Three months ended September 30, Nine months ended September 30,

(Millions) 2023 2024 2023

7 unchanged sentences

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:

These include, but are not limited to, the following:

• 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.

4 unchanged sentences

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.

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 .

5 unchanged sentences

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.

For the three and nine months ended September 30, 2024, Solventum recognized operating expense of $ 144 million and $ 231 million, respectively, related to services received under the above 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).

9 unchanged sentences

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.

The Company recognized revenue and cost of sales associated with products sold to 3M of $ 17 million and $ 12 million, respectively, for the three months ended September 30, 2024.

The Company recognized

revenue and cost of sales associated with products sold to 3M of $ 27 million and $ 20 million, respectively, for the nine months ended September 30, 2024.

Cost of sales related to purchases from 3M under the master supply agreements was $ 68 million for the three and nine months ended September 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,

Three months ended September 30, Nine months ended September 30,

(Amounts in millions) 2024 2023 2024 2023

4 unchanged sentences

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.

Non-current amounts due to 3M in connection with the transition distribution services agreement were approximately $ 72 million at September 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 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.

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 consolidated and 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,

Three months ended September 30, Nine months ended September 30,

(Millions) 2024 2023 2024 2023

23 unchanged sentences

Business Segment Information

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

Three months ended September 30, Nine months ended September 30,

Net Sales (Millions)

6 unchanged sentences

Total Company $ 2,082 $ 2,074 $ 6,179 $ 6,161

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

Three months ended September 30, Nine months ended September 30,

Operating Performance (Millions)

14 unchanged sentences

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