What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-08 · 281 added, 326 removed, 484 unchanged (56% of the section changed)

1 unchanged sentence

Solventum Corporation

Condensed Consolidated and Combined Statements of Income

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

Condensed Consolidated Statements of Income (Unaudited)

Three months ended March 31,

(Millions, except per share data) 2025 2024

7 unchanged sentences

Research and development expenses 193 195

Total operating expenses 1,807 1,570 5,279 4,875

Operating income 152 381

2 unchanged sentences

Income before income taxes 38 329

Provision for income taxes 45 40 144 202

Provision for (benefit from) income taxes ( 99 ) 92

Net income $ 137 $ 237

5 unchanged sentences

Diluted 174.8 172.7

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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Solventum Corporation

Condensed Consolidated and Combined Statements of Comprehensive Income

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

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three months ended March 31,

(Millions) 2025 2024

2 unchanged sentences

Cumulative translation adjustment 154 ( 86 )

Defined benefit pension

Defined benefit pension and postretirement plans 14 —

Cash flow hedging instruments ( 11 ) —

1 unchanged sentence

Comprehensive income $ 294 $ 151

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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Solventum Corporation

Condensed Consolidated and Combined Balance Sheets

September 30, December 31,

(Millions) 2024 2023

Condensed Consolidated Balance Sheets (Unaudited)

March 31, December 31,

(Millions, except share information) 2025 2024

Current assets

7 unchanged sentences

Other current assets 249 293

Current assets held for sale 293 —

Total current assets 3,053 3,249

3 unchanged sentences

Other assets 814 665

Non-current assets held for sale 2,106 —

Total assets $ 14,527 $ 14,457

5 unchanged sentences

Other current liabilities 891 1,041

Current liabilities held for sale 57 —

Total current liabilities 2,566 2,703

3 unchanged sentences

Other liabilities 279 410

Non-current liabilities held for sale 47 —

Total liabilities $ 11,265 $ 11,498

1 unchanged sentence

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

Shares issued and outstanding - September 30, 2024:

Shares issued and outstanding - March 31, 2025:

Shares issued and outstanding - December 31, 2024:

1 unchanged sentence

Retained earnings 378 242

Net parent investment — 12,003

Accumulated other comprehensive income (loss)

2 unchanged sentences

Total liabilities and equity $ 14,527 $ 14,457

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 Changes in Equity

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

Net income — — — 122 — — 122

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — 179 179

Defined benefit pension — — — — — 10 10

Cash flow hedging — — — — — ( 11 ) ( 11 )

Total other comprehensive income (loss), net of tax — — — — — 178 178

Net transfers to 3M

— — — — — — —

Stock-based compensation — — 27 — — — 27

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

Net income — — — — 460 — 460

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — ( 134 ) ( 134 )

Defined benefit pension — — — — — — —

Total other comprehensive income (loss), net of tax — — — — — ( 134 ) ( 134 )

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

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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Solventum Corporation

Condensed Consolidated and Combined Statements of Changes in Equity, Continued

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

Condensed Consolidated Statements of Changes in Equity (Unaudited)

Three Months Ended March 31, 2025 and March 31, 2024

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

2 unchanged sentences

Other comprehensive income (loss), net of tax — — — — — 157 157

Cumulative translation adjustment — — — — — 94 94

Defined benefit pension — — — — — 20 20

Cash flow hedging — — — — — ( 10 ) ( 10 )

Total other comprehensive income (loss), net of tax — — — — — 104 104

Net transfers to 3M

3 unchanged sentences

— — ( 8 ) — — — ( 8 )

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

173 2 3,663 — ( 3,665 ) — —

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

Balance at March 31, 2025 173 $ 2 $ 3,781 $ 378 $ — $ ( 899 ) $ 3,262

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

1 unchanged sentence

Other comprehensive income (loss), net of tax — — — — — ( 86 ) ( 86 )

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

Defined benefit pension

— — — — — — —

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

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

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.

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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Solventum Corporation

Condensed Consolidated and Combined Statements of Cash Flows

Nine months ended September 30,

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three months ended March 31,

(Millions) 2025 2024

5 unchanged sentences

Stock-based compensation expense 49 4

Gain on business divestitures — ( 56 )

Deferred income taxes ( 144 ) ( 25 )

5 unchanged sentences

Due to related parties

Accrued compensation ( 95 ) ( 46 )

All other operating activities ( 44 ) ( 17 )

2 unchanged sentences

Purchases of property, plant and equipment ( 109 ) ( 102 )

Proceeds from sale of business — 60

Other — net ( 5 ) —

Net cash used in investing activities ( 114 ) ( 102 )

( 253 ) ( 142 )

Cash Flows from Financing Activities

3 unchanged sentences

Other — net ( 8 ) 10

Net cash used in financing activities

( 136 ) ( 1,246 )

Net cash (used in) provided by financing activities ( 139 ) 462

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

Net increase (decrease) in cash and cash equivalents ( 223 ) 802

Cash and cash equivalents at beginning of year 194 61

Cash and cash equivalents at beginning of period 762 194

Cash and cash equivalents within held for sale ( 5 ) —

Cash and cash equivalents at end of period $ 534 $ 996

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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Solventum Corporation

Notes to the Condensed Consolidated and Combined Financial Statements

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Significant Accounting Policies

6 unchanged sentences

Solventum is a leading global healthcare company with a broad portfolio of trusted solutions that leverage deep material science, data science, and digital capabilities to address critical customer needs.

Solventum is organized into four operating business segments that are aligned with the end markets that we serve:

Solventum is organized into four operating business segments that are aligned with the end markets that the Company serves:

MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.

On February 25, 2025, the Company entered into a definitive agreement to sell its Purification and Filtration business to Thermo Fisher Scientific Inc.

for $ 4.1 billion.

Refer to Note 3, "Acquisitions and Divestitures" for additional information.

Basis of Presentation

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 (“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.

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

generally accepted accounting principles ( “U.S.

GAAP ” ) and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”) and present the financial position, results of operations, and cash flows for the periods presented.

The interim condensed consolidated 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.

These adjustments consist of normal, recurring items.

1 unchanged sentence

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 .

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.

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

The financial statements included in this interim report are referred to as the “Condensed Consolidated Financial Statements” for all periods presented.

Amounts reported within this interim report are rounded to the nearest million and the sum of the components may not equal the total amount reported due to rounding.

Additionally, certain columns and rows within tables may not sum due to rounding.

All intercompany transactions and balances within Solventum have been eliminated.

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 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 ” ).

These unaudited condensed consolidated financial statements include certain transactions with 3M, which are disclosed as related party transactions in Note 16, “Related Parties”.

The unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual Report”).

New Accounting Pronouncements

The table below provides summaries of applicable new accounting pronouncements issued, but not yet adopted by Solventum.

The table below provides summaries of recently issued financial accounting standards.

Standard Relevant Description Effective Date for Solventum Impact of Adoption

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

Issued in November 2023.

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

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):

3 unchanged sentences

Year-end December 31, 2025 The Company is currently assessing the impact that the updated standard will have on financial statement disclosures.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

Issued in November 2024.

Requires additional disclosure of the nature of expenses included in the income statement.

Year-end December 31, 2026 The Company is currently assessing the impact that the updated standard will have on financial statement disclosures.

Revenue Recognition

1 unchanged sentence

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

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.

Approximately $ 220 million of the December 31, 2024 balance was recognized as revenue during the three months ended March 31, 2025, while approximately $ 240 million of the December 31, 2023 balance was recognized as revenue during the three months ended March 31, 2024.

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 $ 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.

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 $ 144 million for the three months ended March 31, 2025, and $ 146 million for the three months ended March 31, 2024.

Customer Concentration

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.

No customer accounted for more than 10% of the Company’s revenues for the three months ended March 31, 2025 or 2024.

Additionally, no customers accounted for more than 10% of accounts receivable as of March 31, 2025 or December 31, 2024.

Acquisitions and Divestitures

The Company had no acquisitions during the three months ended March 31, 2025 or 2024.

On February 25, 2025, the Company entered into a definitive agreement to sell its Purification and Filtration business to Thermo Fisher Scientific Inc.

for $ 4.1 billion.

The closing of the transaction is expected to be completed by the end of the 2025 calendar year, subject to regulatory approvals and customary closing conditions.

The Company concluded that the Purification and Filtration business met the criteria to be classified as held for sale in February 2025.

Accordingly, the Company has separately reflected the held for sale assets and liabilities of the Purification and Filtration business on its condensed consolidated balance sheets as of March 31, 2025.

The major classes of assets and liabilities classified as held for sale are as follows:

(Millions) 2025

Accounts receivables — net of allowances $ 127

Inventories 144

Other current assets 22

Current assets held for sale 293

Property, plant and equipment — net 503

Goodwill 1,494

Intangible assets — net 106

Other assets 3

Non-current assets held for sale 2,106

Accounts payable 17

Other current liabilities 40

Current liabilities held for sale 57

Pension and postretirement benefits 29

Other liabilities 18

Non-current liabilities held for sale $ 47

The Company determined that the sale of the Purification and Filtration business did not meet the criteria to be reported as discontinued operations.

A component of an entity is reported in discontinued operations after meeting the criteria for held for sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results.

The Company analyzed the quantitative and qualitative factors relevant to the divestiture of the Purification and Filtration business, including its significance to the Company’s overall strategy, net sales and operating income, and determined that those conditions for discontinued operations presentation had not been met.

Goodwill and Intangible Assets

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

The goodwill balance by business segment follows:

There was no goodwill recorded from acquisitions during the three months ended March 31, 2025.

The goodwill balance by business segment is as follows:

(Millions) MedSurg Dental Solutions Health Information Systems Purification and Filtration Total

1 unchanged sentence

Translation impact 70 13 1 24 108

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

Amount reclassified as held for sale — — — ( 1,494 ) ( 1,494 )

Balance as of March 31, 2025 $ 3,667 $ 452 $ 872 $ — $ 4,991

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:

September 30, December 31,

The carrying amount and accumulated amortization of acquired finite-lived intangible assets are as follows:

March 31, December 31,

(Millions) 2025 2024

8 unchanged sentences

Total accumulated amortization ( 2,416 ) ( 2,800 )

Total finite-lived intangible assets — net 2,651 2,877

Indefinite lived intangible assets — 25

Total intangible assets — net $ 2,365 $ 2,544

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 and is being amortized over the expected phase-out period.

Amortization expense was as follows:

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

Three months ended March 31,

(Millions) 2025 2024

Amortization expense $ 81 $ 87

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

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2025 is as follows:

(Millions) Remainder of 2025 2026 2027 2028 2029 2030 After 2030

1 unchanged sentence

Other Current Liabilities

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

September 30, December 31,

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

March 31, December 31,

(Millions) 2025 2024

Other current liabilities

Accrued compensation $ 251 $ 209

Accrued compensation and withholdings $ 217 $ 309

Accrued taxes

5 unchanged sentences

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

September 30, December 31,

March 31, December 31,

(Millions) 2025 2024

7 unchanged sentences

Depreciation expense consisted of the following:

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

Three months ended March 31,

(Millions) 2025 2024

3 unchanged sentences

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 )

Other comprehensive income (loss), before tax:

Amounts before reclassifications 179 — ( 15 ) 164

Amounts reclassified out — 13 — 13

Total other comprehensive income (loss), before tax 179 13 ( 15 ) 177

Tax effect — ( 3 ) 4 1

Total other comprehensive income (loss), net of tax 179 10 ( 11 ) 178

Transfers from 3M, net of tax — — — —

Balance at September 30, 2024, net of tax:

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

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 )

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 134 ) — ( 134 )

Amounts reclassified out — — —

Total other comprehensive income (loss), before tax ( 134 ) — ( 134 )

Tax effect — — —

Total other comprehensive income (loss), net of tax ( 134 ) — ( 134 )

Transfers from 3M, net of tax — — —

Balance at September 30, 2023, net of tax:

$ ( 548 ) $ 7 $ ( 541 )

Nine months ended September 30, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension

Cash Flow Hedging Total Accumulated Other Comprehensive Income (Loss)

Three months ended March 31, 2025

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

Balance at December 31, 2024, net of tax:

6 unchanged sentences

Total other comprehensive income (loss), net of tax 154 14 ( 11 ) 157

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

Balance at September 30, 2024, net of tax:

Balance at March 31, 2025, net of tax:

$ ( 396 ) $ ( 512 ) $ 9 $ ( 899 )

Nine months ended September 30, 2023

(Millions) Cumulative Translation Adjustment Defined Benefit Pension

Total Accumulated Other Comprehensive Income (Loss)

Three months ended March 31, 2024

(Millions) Cumulative Translation Adjustment Defined Benefit Pension and Postretirement Plans 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 — ( 535 ) — ( 535 )

Balance at September 30, 2023, net of tax:

Balance at March 31, 2024, net of tax:

$ ( 433 ) $ ( 525 ) $ — $ ( 958 )

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

Additional details on the amounts reclassified from AOCI 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:

• Defined benefit pension and postretirement plans:

amounts were reclassified into other expense (income), net (see Note 10).

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

• Cash flow hedging:

foreign currency forward contracts amounts were reclassified into cost of sales (see Note 11).

• The tax effects, if applicable, associated with these reclassifications were reflected in provision for (benefit from) 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 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.

The effective tax rates for the three months ended March 31, 2025 and 2024 were ( 262.1 )% and 28.0 %, respectively.

The decrease in our effective tax rate is primarily due to tax benefit on the expected divestiture of the Purification and Filtration business and a different geographic mix of earnings.

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%.

1 unchanged sentence

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.

In the three months ended March 31, 2025, the Company incurred an insignificant tax impact in connection with Pillar Two.

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 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 September 30, 2024 consisted of the following:

Long-term debt and short-term borrowings as of March 31, 2025 and December 31, 2024 consisted of the following:

(Millions) Currency/ Fixed vs.

Floating Final Maturity Date Carrying Value

Description September 30, 2024

Floating Effective Interest Rate Final Maturity Date Carrying Value

Description March 31, 2025 December 31, 2024

Eighteen month senior term loan credit facility

18 unchanged sentences

Long-term debt (excluding current portion) $ 7,813 $ 7,810

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 (collectively, 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 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 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 amounts retained in order to achieve the $ 600 million retained cash target.

The Company’s borrowings include $ 6.9 billion aggregate principal amount of senior notes in six series with maturity dates ranging from 2027 through 2064 (collectively, the “Senior Notes”).

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

1 unchanged sentence

In addition, the Indenture contains other customary terms, including certain events of default, upon the occurrence of which the Senior Notes may be declared immediately due and payable.

The Company is in compliance with all covenants related to the Senior Notes.

Credit Facilities

3 unchanged sentences

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

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

At March 31, 2025, 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.

In March 2025, the Company paid $ 100 million of the aggregate principal amount outstanding under the eighteen month senior unsecured term loan credit facility.

Commercial Paper

1 unchanged sentence

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

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

There was no commercial paper outstanding as of March 31, 2025.

Future Maturities of Long-term Debt:

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):

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 March 31, 2025.

The maturities of long-term debt for the periods subsequent to March 31, 2025 are as follows (in millions):

2025 2026 2027 2028 2029 2030 After 2030 Total

2 unchanged sentences

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.

At March 31, 2025, 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 $ 7.9 billion compared to a carrying value of $ 7.8 billion.

At December 31, 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 $ 7.8 billion compared to a carrying value of $ 7.8 billion.

The fair value was estimated using quoted market prices for the publicly registered Senior Notes, which are classified as Level 2 within the fair value hierarchy.

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

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.

pension and postretirement plan obligations and assets with respect to current and former employees of Solventum 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.

These plans included the U.S.

defined benefit pension plans as well as postretirement health care and life insurance benefits for U.S.

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 in March 2024.

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

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.

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

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

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.

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 U.S.

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.

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

The service cost component of defined benefit net periodic benefit cost is recorded in costs of product;

costs of software and rentals;

The service cost component of defined benefit net periodic benefit cost is recorded in cost of product;

cost of software and rentals;

selling, general and administrative;

and research and development.

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,

Components of net periodic benefit cost and other supplemental information for the three months ended March 31, 2025 and 2024 are as follows:

Three months ended March 31,

Qualified and Non-qualified Pension Benefits

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Expected return on plan assets ( 31 ) — ( 6 ) ( 5 ) ( 2 ) —

Amortization of transition asset — — — — — —

Amortization of prior service benefit — — — — — —

Amortization of net actuarial loss 16 — — — 1 —

Settlements — — — — — —

Other — — — — — —

Total non-operating expense (benefit) 9 — ( 1 ) — 2 —

Total net periodic benefit cost (benefit) $ 15 $ — $ 4 $ 4 $ 3 $ —

Nine months ended September 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 $ 14 $ — $ 14 $ — $ 2 $ —

Non-operating expense

Interest cost 46 — 15 — 6 —

Expected return on plan assets ( 68 ) — ( 15 ) — ( 4 ) —

Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss

Amortization of transition asset $ — $ — $ — $ — $ — $ —

Prior service cost (benefit) — — — — — —

Amortization of prior service benefit — — — — — —

Net actuarial (gain) loss — — — — — —

Amortization of net actuarial loss ( 16 ) — — — ( 1 ) —

Total non-operating expense (benefit) 4 — — — 2 —

Total net periodic benefit cost (benefit) $ 18 $ — $ 14 $ — $ 4 $ —

Settlements — — — — — —

Foreign currency — — — — — —

Total recognized in other comprehensive (income) loss ( 16 ) — — — ( 1 ) —

Total recognized in net periodic benefit cost (benefit) and other comprehensive (income) loss $ ( 1 ) $ — $ 4 $ 4 $ 2 $ —

During the three months ended March 31, 2025, the Company made cash contributions totaling $ 2 million to its U.S.

pension plans and $ 4 million to its international pension plans.

In 2025, the Company expects to make total cash contributions of approximately $ 21 million to these plans.

The Company funds annually, at a minimum, the statutorily required minimum amount for our qualified plans.

Non-qualified plans are unfunded and we pay benefits from our cash on hand.

Future contributions will depend on market conditions, interest rates and other factors.

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.

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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.

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 (loss) 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.

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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.

The portion of gains or losses on the derivative instrument previously included in accumulated other comprehensive income (loss) for de-designated hedges remains in accumulated other comprehensive income (loss) 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 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.

As of March 31, 2025, the Company had a balance of $ 9 million associated with the after-tax net unrealized gain associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

Of the total after-tax net unrealized balance as of March 31, 2025, Solventum expects to reclassify to earnings approximately $ 7 million after-tax net unrealized gain over the next 12 months based on exchange rates as of March 31, 2025.

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 September 30, Nine months ended September 30,

Three months ended March 31,

(Millions) 2025 2024

Foreign currency forward contracts $ ( 14 ) $ —

Net Investment Hedges - The Company enters into cross-currency swaps to hedge portions of the Company's investment in foreign subsidiaries and manage foreign exchange risk.

For instruments that are designated and qualify as hedges of net investments in foreign operations and that meet the effectiveness requirements, the net gains and losses attributable to changes in spot exchange rates are recorded in cumulative translation within other comprehensive income.

The remainder of the change in value of such instruments is recorded in earnings.

Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the foreign operation.

Solventum's use of cross-currency swaps designated as hedges of the Company's net investment in foreign subsidiaries can vary by time period in connection with the extent of the Company's desired foreign exchange risk coverage.

In March 2025, the Company entered into additional cross-currency swaps designated as net investment hedges of approximately $ 377 million.

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.

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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 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.

Statement of Income Location and Impact of Derivative Instruments

The impact to income related to both derivative instruments designated in cash flow hedging relationships and those not designated as hedging instruments for the three months ended March 31, 2025 was not material.

The impact from derivative instruments designated in cash flow hedging relationships was reflected within cost of sales and the impact from derivatives not designated as hedging instruments was reflected within other expense (income), net on the condensed consolidated statements of income.

The amount of gain (loss) excluded from effectiveness testing recognized in income relative to instruments designated in net investment hedge relationships is not material.

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.

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

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

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(Millions) Location Fair Value Amount Location Fair Value Amount

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

March 31, December 31, March 31, December 31, March 31, December 31,

2025 2024 2025 2024 2025 2024

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Foreign currency forward contracts 159 157 Other assets 2 6 Other liabilities 1 —

Cross-currency swaps 756 380 Other assets 1 $ 10 Other liabilities 2 —

Total derivatives designated as hedging instruments $ 1,292 $ 892 $ 10 $ 33 $ 3 $ —

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Foreign currency forward contracts $ 614 $ 397 Other current assets $ 1 $ — Other current liabilities $ 2 $ —

Total derivatives not designated as hedging instruments

$ 18 $ — $ — $ — $ 1 $ —

Total derivative instruments

$ 407 $ — $ — $ — $ 12 $ —

Fair Value Disclosure:

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 fair value measurements.

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

Solventum has determined that these derivatives are considered Level 2 fair value measurements.

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

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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 has elected to present the fair value of derivative assets and liabilities within the Company’s condensed consolidated balance sheets 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.

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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 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.

During the first quarter of 2025 and 2024, the Company recognized $ 12 million and no legal charges, respectively.

During the first quarter of 2025 the Company made a payment of $ 3 million related to a legal settlement.

At March 31, 2025 and December 31, 2024, accrued litigation costs were $ 35 million and $ 25 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.

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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

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3M is a named defendant in over 8,100 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 uninsured 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 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.

Judicial Panel on Multidistrict Litigation ( “ JPML ” ) consolidated all cases pending in federal courts to the U.S.

Judicial Panel on Multidistrict Litigation ( “ JPML ” ) has consolidated all cases pending in federal courts to the U.S.

District Court for the District of Minnesota to be managed in a multi-district litigation ( “ MDL ” ) proceeding.

In July 2019, the court excluded several of the plaintiffs’ causation experts, and granted summary judgment for 3M in all cases pending at that time in the MDL;

Plaintiffs appealed that decision to the U.S.

however, those decisions were subsequently reversed by the U.S.

Court of Appeals for the Eighth Circuit.

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.

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.

In November 2021, the Eighth Circuit court denied 3M’s petition for rehearing en banc.

In May 2022, the U.S.

Supreme Court declined 3M's February 2022 request to review the Eighth Circuit court's decision.

Separately, in August 2021, the Eighth Circuit court affirmed the 2018 jury verdict in 3M’s favor in the only bellwether trial in the MDL.

In February 2022, the MDL court ordered the parties to engage in any mediation sessions that a court-appointed mediator deems appropriate.

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

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.

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.

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.

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 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 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 2025.

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.

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

The parties are actively litigating several MDL bellwether and state court cases, with trials anticipated in 2025 and 2026.

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

Additionally, 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.

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

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The representative plaintiff seeks relief (including punitive damages) under Canadian law based on theories similar to those asserted in the MDL.

For product liability litigation 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 results of operations or financial condition.

For product liability litigation 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 is not material to the Company’s results of operations or financial condition.

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

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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 further status reports in July and September 2024.

The KCI Defendants and the relator-plaintiff submitted an updated status report to the court during January 2024 and updated status reports to the court periodically thereafter, most recently in March 2025.

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 consolidated 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 is 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.

Warranties/Guarantees

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

The Company had approximately $ 51 million and $ 40 million in bank guarantees, surety bonds, and other similar instruments issued and outstanding at March 31, 2025 and December 31, 2024, respectively.

These instruments are utilized in connection with normal business activities.

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

Restructuring

In the fourth quarter of 2024, the Company announced its Solventum Way restructuring program, which is a reorganization designed to establish a more flexible and decentralized structure, create headroom to invest for growth and an operating model that enhances margins over time.

Solventum expects to commit to further actions under this program and also expects that substantially all actions will be complete by the end of 2025.

The related restructuring charges for periods presented were recorded in the condensed consolidated statement of income as follows:

Three months ended March 31,

(Millions) 2025

Cost of product $ 10

Cost of software and rentals —

Selling, general and administrative expenses 5

Research and development expenses 3

Total operating income impact $ 18

Restructuring actions, including cash and non-cash impacts, are as follows:

(Millions) Employee Termination Benefits Asset-Related and Other Total

Expense incurred in 2024 $ 46 $ 16 $ 62

Non-cash changes — ( 8 ) ( 8 )

Cash payments ( 1 ) — ( 1 )

Accrued liabilities as of December 31, 2024 $ 45 $ 8 $ 53

Expense incurred in 2025 $ 14 $ 4 $ 18

Non-cash changes — ( 4 ) ( 4 )

Cash payments ( 38 ) — ( 38 )

Accrued liabilities as of March 31, 2025 $ 21 $ 8 $ 29

Asset-related and other primarily includes charges associated with asset write-offs and other contractual third party termination costs.

All program charges were recognized within Corporate and are not included within business segment results .

Earnings Per Share

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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 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 September 30, Nine months ended September 30,

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

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

Subsequent to Spin-Off, the dilutive effect of outstanding stock options, restricted stock units ("RSUs") and performance share units ("PSUs") is reflected in the calculation of EPS using the treasury stock method.

As of March 31, 2025, diluted EPS excludes 4.1 million shares issuable under stock-based compensation plans because the effect would have been antidilutive.

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

The computations for basic and diluted EPS are as follows:

Three months ended March 31,

(Amounts in millions, except per share amounts) 2025 2024

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Weighted average common shares outstanding – basic

173.4 172.7 173.1 172.7

Dilution associated with stock-based compensation plans 1.1 —

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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 $ 20 million in the nine months ended September 30, 2024.

Solventum grants annual stock-based compensation awards to certain employees and non-employee directors.

In 2025, the Company's annual grant occurred in the first quarter and included:

1.2 million RSUs that vest over 3 years with a weighted average grant date fair value of $ 75.74 and 0.4 million PSUs that vest based on a combination of service, performance and market conditions, with a weighted average grant date fair value of $ 83.15 .

The actual number of PSUs that vest could range from 0 % to 200 % of the target number of shares granted, and will be determined based on the Company's performance against financial targets and total shareholder return relative to a selected industry peer group;

performance is measured over a three-year period ending December 31, 2027.

The annual grant contains a retirement provision whereby employees who have reached age 55 and completed ten years of service with the Company will continue to vest in their award after they retire.

For these awards, expense is recognized over the required service period.

The compensation cost of awards to grant recipients who meet these conditions on the grant date is recognized on the grant date.

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.

Amounts recognized in the condensed consolidated financial statements related to stock-based compensation awards, including stock options, RSUs, and PSUs, are provided in the following table.

Total stock-based compensation expense recognized in cost of product and cost of software and rentals has been combined in the table below as cost of sales.

Capitalized stock-based compensation amounts were not material.

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

Three months ended March 31,

(Millions) 2025 2024

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Selling, general and administrative expenses 36 3

Research, development and related expenses 2 1 14 7

Research and development expenses 8 —

Stock-based compensation expenses 49 4

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

Income tax benefits (expense) ( 5 ) 2

Stock-based compensation expenses, net of tax

$ 22 $ 4 $ 74 $ 24

Related Parties

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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 .

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 consolidated balance sheets and have instead been reported within Net parent investment as a component of equity .

Corporate Allocations

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.

The condensed consolidated 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.

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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 April 1, 2024.

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

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

There was no expense allocation activity from 3M after April 1, 2024.

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

Three months ended March 31,

(Millions) 2024

Costs of product $ 25 $ 15 $ 60

Costs of software and rentals — — —

Selling, general and administrative 186 177 551

Research and development 29 28 84

Total $ 240 $ 220 $ 695

Cost of product $ 15

Cost of software and rentals —

Selling, general and administrative expenses 177

Research and development expenses 28

Related Party Transactions After Spin-Off

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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:

• 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 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).

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.

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.

Below is a summary of activity between Solventum and 3M for the periods presented:

• Separation related adjustments, which are the net impact of certain assets and liabilities that were retained by 3M and those that were transferred to Solventum as of March 31, 2024, resulted in a decrease to net assets and total equity of $ 1.1 billion in the second quarter of 2024.

This activity was reflected in the “Net transfers to 3M” line item of the condensed consolidated statements of changes in equity.

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

• Transition agreement expenses for the three months ended March 31, 2025 were $ 137 million and are related to services received under transition agreements between the Company and 3M and its affiliates.

These expenses are reflected in cost of product and operating expense (which is comprised of selling, general and administrative and research and development expenses) on the Company's condensed consolidated statements of income.

• Master supply agreement activity for three months ended March 31, 2025 comprised of revenue and cost of sales associated with products sold to 3M of $ 20 million and $ 15 million, respectively.

Cost of product related to purchases from 3M under the master supply agreements was $ 63 million for the three months ended March 31, 2025.

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 September 30, Nine months ended September 30,

The Company had the following transactions with 3M and its affiliates, primarily in connection with the transition and master supply agreements, reported in the Company’s condensed consolidated financial statements:

Three months ended March 31,

(Amounts in millions) 2025 2024

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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 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.

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 financial statements.

Non-current amounts due to 3M were approximately $ 66 million at March 31, 2025 and were recognized in “Other liabilities” in the condensed consolidated balance sheets.

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 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 September 30, Nine months ended September 30,

Net transfers to 3M are included within Net parent investment in the condensed consolidated statements of changes in equity and within financing activities in the condensed consolidated 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 changes in equity and the condensed consolidated statements of cash flows are as follows:

Three months ended March 31,

(Millions) 2025 2024

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

$ — $ ( 473 ) $ ( 8,575 ) $ ( 1,190 )

Net transfers to 3M on the condensed consolidated changes in equity $ ( 31 ) $ ( 7,431 )

Stock compensation expense — ( 4 )

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Net balances transferred from 3M — ( 411 )

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

$ — $ ( 487 ) $ ( 8,247 ) $ ( 1,248 )

Net transfers to 3M on the condensed consolidated statements of cash flows $ ( 31 ) $ ( 7,851 )

Business Segments

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The Company’s CODM is its Chief Executive Officer.

The primary profitability measurement used by the CODM to review segment operating results is segment operating income.

The CODM uses segment operating income to allocate resources during the annual strategic planning process and then holds the segments accountable to the resourcing decisions during the annual budgeting process.

The CODM does not use asset information by segment to evaluate operating segments as the CODM does not receive discrete asset information by segment.

The Company’s operating activities are managed through four operating segments:

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No operating segments have been aggregated to form reportable 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.

Corporate and Unallocated primarily includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, and Spin-Off and separation related costs.

Spin-Off and separation related costs include any costs incurred as part of our separation from 3M and costs to set up 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 our agreements to supply 3M and other supply agreements assumed by the Company at Spin-Off related to legacy 3M businesses.

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

Business segment operating income is reconciled to total operating income and pre-tax income below.

Consistent accounting policies have been applied by all segments for all reporting periods.

A description of our reportable segments has been provided in Note 1 to the audited combined financial statements within the Company’s Information Statement dated March 11, 2024.

Business Segment Information

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

Consistent accounting policies have been applied on a consolidated basis as well as by all segments for all reporting periods.

Business Segment Information and Disaggregated Net Sales

Three months ended March 31,

Net Sales (Millions)

2024 2023 2024 2023

Advanced Wound Care $ 448 $ 441

Infection Prevention and Surgical Solutions 710 678

MedSurg 1,157 1,119

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Total Company $ 2,070 $ 2,016

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

Three months ended March 31,

Cost of Sales (Millions) 2025 2024

MedSurg $ 548 $ 493

Dental Solutions 118 106

Health Information Systems 88 89

Purification and Filtration 134 136

Three months ended March 31,

Operating Expenses (Millions)* 2025 2024

MedSurg $ 404 $ 405

Dental Solutions 132 119

Health Information Systems 132 127

Purification and Filtration 73 70

* Operating expenses are comprised of selling, general and administrative expenses and research and development expenses as shown on the condensed consolidated statements of income.

Three months ended March 31,

Operating Performance (Millions)

2024 2023 2024 2023

MedSurg $ 206 $ 221

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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