Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)

Consolidated Financial Statements

Index to Financial Statements

A complete summary of Form 10-K content, including the index to financial statements, is found at the beginning of this document.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Solventum Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Solventum Corporation and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of income, of comprehensive income, of changes in equity, and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Acera Surgical (“Acera”) from its assessment of internal control over financial reporting as of December 31, 2025 because it was acquired by the Company in a purchase business combination during 2025. We have also excluded Acera from our audit of internal control over financial reporting. Acera is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of the related consolidated financial statement amounts as of and for the year ended December 31, 2025.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

As described in Note 1 to the consolidated financial statements, the majority of the Company’s customer arrangements contain a single performance obligation. For these customer arrangements, control transfers to customers at a point-in-time when goods have been delivered as that is generally when legal title, physical possession and risks and rewards of ownership transfer to the customer. The Company also enters into customer arrangements that involve multiple performance obligations (such as rental of equipment and related consumables), software with coterminous post-contract support, and software-as-a-service. For certain arrangements, specifically software sold with coterminous post-contract support that is integral to maintaining the utility of the software license to the customer and software-as-a-service, control transfers over time as the customer simultaneously receives and consumes the benefits as the Company completes the performance obligation(s). The Company recognizes rental revenue based on the length of time a device is used by the patient/organization. Revenue is recognized at the transaction price which the Company expects to be entitled. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using management’s best estimate of the standalone selling price of each distinct good or service in the contract. The Company’s net sales of product and net sales of software and rentals were $6,349 million and $1,976 million, respectively, for the year ended December 31, 2025.

The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others (i) testing revenue recognized for a sample of revenue transactions from sales of product by obtaining and inspecting source documents, such as contracts, purchase orders, invoices, proof of shipment or delivery, and cash receipts; (ii) testing revenue recognized for a sample of revenue transactions from sales of software with coterminous post-contract support and software-as-a-service (collectively, “software”) by obtaining and inspecting source documents, such as contracts, purchase orders, invoices, proof of delivery, and cash receipts; (iii) testing revenue recognized for a sample of revenue transactions from arrangements involving rental equipment and related consumables (“rental”) by obtaining and inspecting source documents, such as contracts, purchase orders, invoices, proof of delivery, and cash receipts; (iv) testing a sample of sales credit transactions for product, software, and rental revenue by obtaining and inspecting source documents, such as support for the nature of the credit, including valid business purpose and application, and amount; and (v) confirming a sample of outstanding customer invoice balances as of December 31, 2025 for product, software, and rental revenue transactions and, for confirmations not returned, obtaining and inspecting source documents, such as contracts, purchase orders, invoices, proof of shipment or delivery, and subsequent cash receipts.

Divestiture of Purification and Filtration Business – Gain on Sale

As described in Notes 1, 3, and 8 to the consolidated financial statements, on February 25, 2025, the Company entered into a Transaction Agreement to sell its Purification and Filtration business to Thermo Fisher Scientific Inc. ("Buyer"). On June 25, 2025, the Company and Buyer entered into an Amended and Restated Transaction Agreement (the "Agreement") to exclude the Company’s drinking water filtration business (the "Water Business") from the scope of the Purification and Filtration business to be acquired by Buyer (such acquired business, the "Business"). On September 1, 2025, the sale of the Business to the Buyer was completed. The cash consideration paid to the Company at closing was approximately $4 billion resulting in a pre-tax gain of approximately $1.5 billion. Under the Agreement, Buyer is entitled to receive a payment of up to $75 million from the Company either upon a sale of the Water Business or after an agreed upon 3-year period. The Company recorded $64 million related to the Water Business liability within the other liabilities on the consolidated balance sheet, which was the present value of the expected future obligation at close of the Transaction. In connection with the sale of the Business, the Company entered

into various transition service agreements to provide certain support services at cost, below fair market value, for a period of up to 24 months from the closing of the sale. In connection with these agreements, the Company recognized an unfavorable contract liability of $113 million, which will be recognized over the terms of the transition service agreements. The Company recognized corresponding income tax impacts in various jurisdictions as a result of the gain on sale. Judgment is required in determining the Company’s tax expense and in the application of relevant tax laws and regulations to its tax positions.

The principal considerations for our determination that performing procedures relating to the gain on sale relating to the divestiture of the Purification and Filtration business is a critical audit matter are (i) the significant judgment by management when determining the gain on sale and corresponding tax effects; (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to (a) the consideration received pursuant to the Agreement, (b) the measurement of the disposal group, and (c) the application of tax laws and regulations in connection with management’s determination of the income tax effects of the divestiture; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Acquisition of Acera Surgical – Valuation of Developed Technology

As described in Note 3 to the consolidated financial statements, on December 23, 2025, the Company acquired Acera Surgical (“Acera”) for total purchase consideration of $776 million, which included cash consideration of $696 million, net of cash acquired, and a future milestone payment of an additional $125 million that had a fair value of $80 million on the acquisition date. The acquired intangible assets of $440 million consisted primarily of developed technology. The fair value of the developed technology was determined using a multi-period excess earnings method which includes significant assumptions related to revenue growth rates, EBITDA margins, obsolescence factors, and discount rate.

The principal considerations for our determination that performing procedures relating to the valuation

of developed technology acquired in the acquisition of Acera is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the developed technology acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, EBITDA margins, discount rate, and obsolescence factors for developed technology; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the developed technology acquired; (iii) evaluating the appropriateness of the multi-period excess earnings method used by management; and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, EBITDA margins, obsolescence factors, and discount rate for developed technology. Evaluating management’s assumptions related to revenue growth rates and EBITDA margins for developed technology involved considering (i) the current and past performance of the Acera business; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the discount rate and obsolescence factors assumptions for developed technology.

/s/ PricewaterhouseCoopers LLP

Minneapolis, Minnesota

February 27, 2026

We have served as the Company's auditor since 2022.

Solventum Corporation

Consolidated Statements of Income


	Year ended December 31,
(Millions, except per share data)	2025		2024		2023
Net sales of product	$	6,349	$	6,348	$	6,296
Net sales of software and rentals	1,976		1,906		1,901
Total net sales	8,325		8,254		8,197
Cost of product	3,402		3,172		3,023
Cost of software and rentals	472		489		481
Gross profit	4,451		4,593		4,693
Selling, general and administrative expenses	3,080		2,782		2,299
Research and development expenses	739		775		758
Gain on sale of business	(1,549)		—		(56)

Operating income	2,181		1,036		1,692
Interest expense, net	347		367		—
Loss on debt extinguishment, net	82		—		—
Other expense (income), net	39		64		25
Income before income taxes	1,713		605		1,667
Provision for income taxes	157		127		321
Net income	$	1,556	$	479	$	1,346

Earnings per share:
Basic earnings per share	$	8.94	$	2.77	$	7.79
Diluted earnings per share	8.88		2.76		7.79
Weighted-average number of shares outstanding:
Basic	174.1		173.2		172.7
Diluted	175.3		173.7		172.7

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

Solventum Corporation

Consolidated Statements of Comprehensive Income


	Year ended December 31,

(Millions)	2025		2024		2023
Net income	$	1,556	$	479	$	1,346
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment	420		(203)		157
Defined benefit pension and postretirement plans	38		(5)		(33)
Cash flow hedging instruments	(28)		20		—
Total other comprehensive income (loss), net of tax	430		(188)		124
Comprehensive income	$	1,986	$	291	$	1,470

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

Solventum Corporation

Consolidated Balance Sheets


	December 31,
(Millions, except share information)	2025		2024
Assets
Current assets
Cash and cash equivalents	$	878	$	762
Accounts receivable — net of allowances of $87 and $86	1,034		1,044
Due from related parties	150		185
Inventories
Finished goods	636		539
Work in process	201		190
Raw materials and supplies	229		236
Total inventories	1,066		965
Other current assets	731		293
Total current assets	3,859		3,249
Property, plant and equipment — net	1,326		1,622
Goodwill	5,704		6,377
Intangible assets — net	2,592		2,544
Other assets	814		665
Total assets	$	14,294	$	14,457
Liabilities
Current liabilities
Short-term borrowings and current portion of long-term debt	$	—	$	200
Accounts payable	687		618
Due to related parties	435		272
Unearned revenue	621		572
Other current liabilities	1,393		1,041
Total current liabilities	3,136		2,703
Long-term debt	5,035		7,810
Pension and postretirement benefits	363		350
Deferred income taxes	164		225
Other liabilities	547		410
Total liabilities	$	9,245	$	11,498
Commitments and contingencies (Note 12)
Equity









Common stock, par value $0.01 per share, 750,000,000 shares authorized	$	2	$	2
Shares issued and outstanding - December 31, 2025: 173,490,864
Shares issued and outstanding - December 31, 2024: 172,785,606
Additional paid-in-capital	3,876		3,771
Retained earnings	1,797		242

Accumulated other comprehensive income (loss)	(625)		(1,056)

Total equity	5,049		2,959
Total liabilities and equity	$	14,294	$	14,457

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

Solventum Corporation

Consolidated Statements of Changes in Equity


	Common Stock
(Millions)	Shares Outstanding	Par Value		Additional Paid-In-Capital		Retained Earnings		Net Parent Investment		Accumulated Other Comprehensive Income (Loss)		Total
Balance at December 31, 2022	—	$	—	$	—	$	—	$	12,239	$	(497)	$	11,742
Net income	—	—		—		—		1,346		—		1,346



Other comprehensive income (loss), net of tax	—	—		—		—		—		124		124
Net transfers to 3M	—	—		—		—		(1,582)		36		(1,546)
Balance at December 31, 2023	—	$	—	$	—	$	—	$	12,003	$	(337)	$	11,666
Net income	—	—		—		242		237		—		479




Other comprehensive income (loss), net of tax	—	—		—		—		—		(188)		(188)
Net transfers to 3M	—	—		—		—		(8,571)		(531)		(9,102)
Stock-based compensation	—	—		108		—		—		—		108
Common stock for tax withholding obligations	—	—		(4)		—		—		—		(4)
Issuance of common stock in connection with Spin-Off and reclassification of net parent investment	173	2		3,667		—		(3,669)		—		—
Balance at December 31, 2024	173	$	2	$	3,771	$	242	$	—	$	(1,056)	$	2,959
Net income	—	—		—		1,556		—		—		1,556




Other comprehensive income (loss), net of tax	—	—		—		—		—		430		430
Net transfers to 3M	—	—		(33)		—		—		—		(33)
Stock-based compensation	—	—		161		—		—		—		161
Common stock for tax withholding obligations	—	—		(24)		—		—		—		(24)

Balance at December 31, 2025	173	$	2	$	3,876	$	1,797	$	—	$	(625)	$	5,049

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

Solventum Corporation

Consolidated Statements of Cash Flows


	Year ended December 31,
(Millions)	2025		2024		2023
Cash Flows from Operating Activities
Net income	$	1,556	$	479	$	1,346
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	489		555		561
Pension and postretirement benefit expense	62		34		41
Stock-based compensation expense	161		112		39
Gain on sale of business	(1,549)		—		(56)
Transaction costs	(111)		—		—
Deferred income taxes	(120)		(155)		(142)
Changes in assets and liabilities
Accounts receivable	34		43		(129)
Due from related parties	44		233		—
Inventories	(139)		(132)		23
Accounts payable	104		266		105
Due to related parties	(11)		(395)		—
Accrued compensation	43		78		142
All other operating activities - net	(194)		67		(15)
Net cash provided by operating activities	369		1,185		1,915

Cash Flows from Investing Activities
Purchases of property, plant and equipment	(379)		(380)		(290)
Acquisitions, net of cash acquired	(696)		—		—
Proceeds from sale of business	3,890		—		60
Other — net	(18)		—		—
Net cash provided by (used in) investing activities	2,797		(380)		(230)

Cash Flows from Financing Activities
Repayment of debt	(3,070)		(300)		—
Net transfers to 3M	(33)		(8,251)		(1,553)
Proceeds from long-term debt, net of issuance costs	—		8,303		—
Other — net	46		8		1
Net cash used in financing activities	(3,057)		(240)		(1,552)

Effect of exchange rate changes on cash and cash equivalents	7		3		—

Net increase (decrease) in cash and cash equivalents	116		568		133
Cash and cash equivalents at beginning of year	762		194		61
Cash and cash equivalents at end of year	$	878	$	762	$	194

Supplemental Cash Flow Information
Cash paid for:
Income taxes	$	181	$	244	$	—
Interest	442		287		—

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

Solventum Corporation

Notes to the Consolidated Financial Statements

NOTE 1. Significant Accounting Policies

Organization and Description of Business

Solventum Corporation ("Solventum," "we," "our," "us," or the "Company") was a business of 3M Company ("3M"). On April 1, 2024 (the "Distribution Date"), 3M completed the previously announced spin-off of Solventum Corporation (the "Spin-Off"). The Spin-Off was completed through a distribution of approximately 80.1% of the Company’s outstanding common stock to holders of record of 3M’s common stock as of the close of business on March 18, 2024 (the "Distribution"), which resulted in the issuance of 172,709,505 shares of common stock. As a result of the Distribution, the Company became an independent public company. Solventum’s common stock is listed under the symbol "SOLV" on the New York Stock Exchange ("NYSE").

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 three reportable operating business segments that are aligned with the end markets that the Company serves: MedSurg, Dental Solutions, and Health Information Systems.

Basis of Presentation

The consolidated 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, comprehensive income, and cash flows for the years ended December 31, 2025, 2024, and 2023, and financial position as of December 31, 2025 and 2024.

The Company’s financial statements are presented on a consolidated basis. 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 financial statements included in this annual report are referred to as the "Consolidated Financial Statements" for all periods presented.

All amounts discussed are in millions of U.S. dollars, unless otherwise indicated. Amounts reported within this annual 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 consolidated financial statements include certain transactions with 3M, which are disclosed as related party transactions in Note 17 "Related Parties."

Foreign currency translation: Local currencies generally are considered the functional currencies outside the United States, and accordingly, the financial statements of these subsidiaries are remeasured as if their functional currency is that of their parent. Assets and liabilities for operations in local-currency environments are translated at month-end exchange rates of the period reported. Income and expense items are translated at average monthly currency exchange rates in effect during the period. Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in the consolidated balance sheets.

Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from those estimates.

Cash and cash equivalents: Cash and cash equivalents included in the Company's consolidated balance sheets includes cash deposits, certificates of deposit, money market and other short-term funds with original maturities of three months or less.

Investments: All equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in other expense (income), net in the consolidated statements of income. Solventum utilizes the measurement alternative for equity investments that do not have readily determinable fair values and measures these investments at cost less impairment plus or minus observable price changes in orderly transactions. When conditions or occurrences change that are out of the ordinary, equity investments are analyzed for impairment. Solventum's equity investments are recognized within other assets in the consolidated balance sheets.

Equipment held for use: Equipment held for use includes medical equipment in rental arrangements utilized primarily by hospitals and other medical clinics in conjunction with other medical consumables. Depreciation expense incurred on this equipment was $26 million, $25 million, and $32 million for the years ended December 31, 2025, 2024, and 2023, respectively. Equipment held for use is included in other assets on the consolidated balance sheets.

Inventories: Inventories are stated at the lower of cost or net realizable value (NRV), which is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Cost is generally determined on a first-in, first-out basis.

Property, plant and equipment: Property, plant and equipment, including capitalized interest and internal direct engineering costs, are recorded at cost. Depreciation of property, plant and equipment generally is computed using the straight-line method based on the estimated useful lives of the assets. The estimated useful lives of buildings and improvements primarily range from ten to forty years, with the majority in the range of twenty to forty years. The estimated useful lives of machinery and equipment primarily range from three to fifteen years, with the majority in the range of five to ten years. Fully depreciated assets are retained in property, plant and equipment and accumulated depreciation accounts until disposal. Upon disposal, assets and related accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to operations. Property, plant and equipment amounts are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis.

Business Combinations: The Company accounts for acquired businesses using the acquisition method of accounting in accordance with U.S. GAAP, which requires the assets and liabilities of the acquired businesses to be recorded and consolidated on the acquisition date at their respective fair values. The Company's business combinations typically result in the recognition of goodwill, developed technology, and other intangible assets. The results of operations from acquisitions are included in the Company's consolidated financial statements from their respective acquisition dates. Transactions costs associated with acquisitions are expensed as incurred and recorded within selling, general, and administrative expenses.

For arrangements that involve potential future contingent consideration, we record a liability at the acquisition date equal to the fair value of the consideration that we expect to pay in the future. Subsequent changes in the fair value of those contingent consideration liabilities are recognized in earnings until the underlying contingencies are resolved.

Goodwill: Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized. Goodwill is tested for impairment annually in the fourth quarter of each year and also if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is done at a reporting unit level, with all goodwill assigned to a reporting unit. Solventum's reporting units correspond to an operating segment as this represents the lowest level of discrete financial information below sales that is available and is regularly reviewed by segment management. The Company did not combine any of its reporting units for impairment testing. Any impairment loss is measured as the amount by which the carrying value of the reporting unit’s net assets exceeds its estimated fair value, not to exceed the carrying value of the reporting unit’s goodwill. The estimated fair value of a reporting unit is determined based on a market approach using comparable company information such as EBITDA (earnings before interest, taxes, depreciation and amortization) multiples or, in some cases, based on a discounted cash flow analysis.

Intangible assets: Intangible asset types include customer-related, patents and technology, and tradenames and other intangible assets acquired from an independent party. Intangible assets with a definite life are amortized on a systematic and rational basis (generally straight line) that is representative of the asset’s use. The estimated useful lives vary by category, with customer-related between ten to nineteen years, patents and technology between eight to ten years, and definite lived tradenames and other between four and sixteen years. Intangible assets are removed from their respective gross asset and accumulated amortization accounts when they are no longer in use. Refer to Note 4 for additional details on the gross amount and accumulated amortization of the Company’s intangible assets.

Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized when the carrying amount exceeds the estimated undiscounted cash flows from the asset’s or asset group’s ongoing use and eventual disposition. If an impairment is identified, the amount of the impairment loss recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis.

Restructuring actions: We record liabilities for costs associated with exit activities in the period in which the liability is incurred. Employee termination costs are accrued when the restructuring is probable and estimable, which typically is when management approves the associated actions. Costs for one-time termination benefits in which the employee is required to

render service in order to receive benefits at their termination dates are measured at the date such benefits were communicated to the applicable employees and recognized as expense over the future service period.

Revenue recognition: The Company sells a wide range of products to a diversified base of customers around the world. The majority of Solventum’s customer arrangements contain a single performance obligation. The Company also enters into customer arrangements that involve multiple performance obligations (such as rental of equipment and related consumables), software with coterminous post-contract support, and software-as-a-service.

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue is recognized when control of goods has transferred to customers. For the majority of the Company’s customer arrangements, control transfers to customers at a point-in-time when goods have been delivered as that is generally when legal title, physical possession and the risks and rewards of ownership transfer to the customer. For certain arrangements, specifically software sold with coterminous post-contract support that is integral to maintaining the utility of the software license to the customer and software-as-a-service, control transfers over time as the customer simultaneously receives and consumes the benefits as the Company completes the performance obligation(s).

Revenue is recognized at the transaction price which the Company expects to be entitled. The transaction price includes customer rebates, trade promotion funds, and cash discounts, which are accounted for as variable consideration. These sales incentives are recorded as a reduction to revenue at the time of the initial sale based on the most-likely estimate. The most-likely estimate considers historical experience, trend analysis, and projected market conditions in the various markets served. Because the Company serves numerous markets, the sales incentive programs offered vary across businesses, but the most common incentive relates to amounts paid or credited to customers for achieving defined volume levels or growth objectives. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Sales, use, value-added, and other excise taxes are not recognized in revenue. The Company has elected to present revenue net of sales taxes and other similar taxes.

Product returns are recorded as a reduction to revenue based on anticipated sales returns that occur in the normal course of business. The Company primarily has assurance-type warranties that do not result in separate performance obligations.

For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company’s best estimate of the standalone selling price of each distinct good or service in the contract. For customers purchasing software from the Company, these performance obligations include providing software licenses with ongoing customer support, installation and training. For medical equipment arrangements, performance obligations include both furnishing a rental unit to a customer as well as delivery of consumables.

The Company recognizes revenue from the rental of equipment in accordance with the guidance of ASC 842, Leases. The Company recognizes rental revenue based on the length of time a device is used by the patient/organization, (i) at the contracted rental rate for contracted customers, and (ii) generally, retail price for non-contracted customers. The leases are short-term in nature and are all classified as operating leases.

The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented. Additionally, the Company does not have material costs related to obtaining a contract with amortization periods greater than one year for any year presented.

Accounts receivable and allowances: Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains allowances for bad debts, which are based on the best estimate of the amount of expected credit losses in existing accounts receivable. The Company determines the allowances based on historical write-off experience informed by industry and regional economic data, and current expectations of future credit losses. The Company reviews the allowances monthly. The allowances for bad debts as well as the provision for credit losses, write-off activity and recoveries for the periods presented are not material.

Research and development: Research and development includes costs related to basic scientific research and the application of scientific advances in the development of new and improved products and their uses; technical support; internally developed patent costs; amortization of externally acquired patents and externally acquired in-process research and development. Research and development costs are expensed as incurred.

Software costs: The Company capitalizes direct costs associated with the development of, and external software acquired for use as, internal-use software. Capitalized software costs are included in property, plant and equipment on the consolidated balance sheets. Amounts capitalized are amortized over a period of three to seven years, generally on a straight-line basis, unless another systematic and rational basis is more representative of the software’s use.

For cloud computing arrangements that are considered service contracts, our capitalization of implementation costs is aligned with the internal use software requirements. However, on the Company's consolidated balance sheets, these implementation costs are recognized in other assets. On our consolidated statements of cash flows, these implementation costs are recognized as cash flows from operating activities. The implementation costs are recognized on a straight-line basis over the expected term of the related service contract, which ranges from three to ten years.

Income taxes: Prior to the Spin-Off, the Company was included in the consolidated U.S. federal, state, and foreign income tax returns of 3M, where applicable, through April 1, 2024. The Company's income tax provision for the periods 2023 and the first quarter of 2024 was prepared using the separate return method. The calculation of income taxes on a separate return basis requires a considerable amount of judgment and use of both estimates and allocations. As a result, transactions included in the consolidated financial statements of 3M may not be included in the Company's consolidated financial statements. Similarly, the tax treatment of certain items reflected in the Company's consolidated financial statements may not be reflected in the consolidated financial statements and tax returns of 3M. Therefore, items such as net operating losses, credit carryforwards, and valuation allowances may exist in the Company's standalone financial statements that may or may not exist in 3M’s consolidated financial statements. After the Spin-Off, the Company has filed tax returns on its own behalf, and its income tax provision was prepared on a standalone basis. As a result, its deferred taxes and effective tax rate for 2025 may differ from those in the historical periods prior to Spin-Off.

In jurisdictions where the Company has been included in income tax returns filed by 3M, income taxes currently payable will be deemed to have been remitted to 3M, in cash, in the period the liability arose and income taxes currently receivable are deemed to have been received from the Parent in the period that a refund could have been recognized. Adjustments to the recorded payable that derive from the Company's current year activity are recorded through current tax expenses and the ending adjusted payable/receivable is settled through "Net parent investment" on the consolidated balance sheets.

Current obligations for tax in jurisdictions where the Company does not file a consolidated tax return with 3M, including certain foreign and certain U.S. state tax jurisdictions, are recorded as accrued liabilities within "Other current liabilities" on the consolidated balance sheets. The effects of tax adjustments and settlements with taxing authorities are presented in our consolidated financial statements in the period to which they relate.

Judgment is required in determining the Company’s tax expense and in the application of relevant tax laws and regulations to its tax positions. Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of tax benefit to recognize in the consolidated financial statements. An uncertain tax position is measured at the largest amount of benefit that the Company believes has a greater than 50 percent likelihood of realization upon settlement. Tax benefits not meeting the measurement or realization criteria represent unrecognized tax benefits. The Company recognizes interest and penalties related to income tax matters as a component of "Provision for income taxes" in the consolidated statements of income.

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their respective tax bases, as well as from net operating loss and tax credit carryforwards. The deferred income tax balances are stated at enacted tax rates expected to be in effect when those taxes are paid or recovered. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. We evaluate the recoverability of these future tax deductions and tax credits by evaluating all available positive and negative evidence, specifically assessing the adequacy of future expected taxable income from all sources, including reversal of existing taxable temporary differences, forecasted operating earnings, and available tax planning strategies. To the extent we consider it more likely than not that a deferred tax asset will not be recovered, a valuation allowance is established.

Stock-based compensation: The Company recognizes compensation expense for its stock-based compensation awards, which include stock options, restricted stock units ("RSUs"), and performance share units ("PSUs"). In accordance with ASC 718, Compensation—Stock Compensation, the fair value of share-based compensation is determined at the grant date and the recognition of the related expense is recognized over the requisite service period for awards expected to vest. The Company estimates forfeitures based on experience and adjusts expense to reflect actual forfeitures. For PSUs, the Company regularly evaluates the achievement of performance goals and adjusts expense based on the number of PSUs that are expected to vest. Prior to Spin-Off, certain employees participated in the stock-based compensation plans sponsored by 3M. The awards to these employees were reflected in "Net parent investment" within the consolidated statements of changes in equity at the time they were expensed.

Comprehensive income: Total comprehensive income and the components of accumulated other comprehensive income (loss) are presented in the consolidated statements of comprehensive income and the consolidated statements of changes in equity. Accumulated other comprehensive income (loss) is composed of foreign currency translation effects, defined benefit pension adjustments and gains/losses from cash flow hedging activity.

Fair value measurements: Solventum follows ASC 820, Fair Value Measurements, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis. Under the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying value of the Company's accounts receivable, accounts payable, and accrued expenses approximate their fair value due to the short period of time to maturity or repayment.

Leases: Solventum determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used.

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the present value of our lease liability is determined using Solventum’s incremental borrowing rate at lease commencement. Solventum determines the incremental borrowing rate for leases using a portfolio approach based primarily on the lease term and the economic environment of the applicable country or region.

Finance lease right-of-use assets and liabilities are generally those leases for which the Company will pay substantially all the underlying asset’s fair value or will use the asset for all or a major part of its economic life, including circumstances in which the Company will ultimately own the asset. Finance lease assets are included in property, plant, and equipment - net, and finance lease liabilities are included in other current liabilities and other liabilities on the consolidated balance sheets. For finance leases, the Company recognizes interest expense using the effective interest method, and the Company recognizes amortization expense on the lease right-of-use asset over the shorter of the lease term or the useful life of the asset. When a finance lease includes a purchase option that the Company is reasonably certain to exercise, the right-of-use asset is amortized over the useful life of the asset.

As a lessee, the Company leases distribution centers, office space, land, and equipment. Certain lease agreements include rental payments adjusted annually based on changes in an inflation index. The Company’s leases do not contain material residual value guarantees or material restrictive covenants. Lease expense is recognized on a straight-line basis over the lease term.

Certain leases include one or more options to renew, with terms that can extend the lease term up to five years. The Company includes options to renew the lease as part of the right-of-use lease asset and liability when it is reasonably certain the Company will exercise the option. In addition, certain leases contain fair value purchase and termination options with an associated penalty. In general, the Company is not reasonably certain to exercise such options.

For the measurement and classification of its lease agreements, the Company groups lease and non-lease components into a single lease component for all underlying asset classes. Variable lease payments primarily include payments for non-lease components, such as maintenance costs, payments for leased assets used beyond their noncancellable lease term as adjusted for contractual options to terminate or renew, additional payments related to a subsequent adjustment in an inflation index, and payments for non-components such as sales tax. Certain leases contain immaterial variable lease payments based on number of units produced.

New Accounting Pronouncements

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


Standard	Relevant Description	Effective Date for Solventum	Impact of Adoption
ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures	Issued in December 2023. Requires disaggregated information about a Company's effective tax rate reconciliation as well as information on income taxes paid.	Year-end December 31, 2025	The Company has assessed the impact of the updated standard and has included expanded disclosures within the income taxes footnote.
ASU No. 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.
ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	Issued September 2025. Updates existing accounting guidance regarding the capitalization of internal-use software costs.	January 1, 2026	The Company has elected to early adopt this standard on a prospective basis and the early adoption of this standard will not have a material impact on the Company's financial statement disclosures.

NOTE 2. Revenue Recognition

Contract Balances

Unearned revenue primarily relates to revenue that is recognized over time for one-year software license contracts. Approximately $550 million, $550 million, and $540 million of the December 31, 2024, 2023, and 2022 balance, respectively, was recognized as revenue during the years ended December 31, 2025, 2024, and 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 $615 million, $600 million, and $616 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Customer Concentration

No customer accounted for more than 10% of the Company’s revenues for the years ended December 31, 2025, 2024, or 2023. Additionally, no customers accounted for more than 10% of accounts receivable as of December 31, 2025 and 2024.

NOTE 3. Acquisitions and Divestitures

Acquisitions

The Company had an acquisition during the year ended 2025 that was accounted for as a business combination. The Company had no acquisitions in 2024.

Year Ended 2025 Acquisitions

On December 23, 2025, the Company acquired Acera Surgical ("Acera"), a privately held bioscience company focused on developing and commercializing fully engineered materials for regenerative wound care that expands the Company's acute care portfolio, pursuant to a merger agreement. For the year ended December 31, 2025, net sales related to Acera were not material to the Company's results of operations or financial condition.

Total purchase consideration was $776 million, which included cash consideration of $696 million, net of cash acquired, and a future milestone payment that had a fair value of $80 million on both the acquisition date and at December 31, 2025. The future milestone payment is dependent on the acquired business achieving a sales-based milestone on or before December 31, 2030.

The future payment owed under the milestone is $125 million. The acquisition date fair value of the contingent consideration was determined using a Monte Carlo simulation, which considered significant unobservable inputs, including management's projection of net sales, revenue volatility and revenue risk premium. Revenue volatility and revenue risk premium were estimated at 45% and 8.9%, respectively. The fair value measurement of the contingent consideration is classified as level 3 within the fair value hierarchy. The fair value of the contingent milestone payment will be remeasured each quarter, with changes in the fair value recognized within the consolidated statements of income.

In connection with the acquisition, the Company agreed to pay $18 million in transaction expenses incurred by the acquiree, which were treated as an assumed liability at close. Acquisition-related expenses of $7 million incurred by the Company were recorded in selling, general, and administrative expenses.

The fair value of the acquisition was allocated to the assets acquired of $488 million, consisting primarily of developed technology and other amortizable intangibles of $440 million, goodwill of $441 million, and liabilities assumed of $131 million, which includes deferred taxes of $94 million. The fair value of the developed technology was determined using a multi-period excess earnings method, which includes significant assumptions related to revenue growth rates, EBITDA margins, obsolescence factors, and discount rate. The weighted-average useful life of the acquired intangible assets is approximately eight years. The goodwill is primarily related to synergies expected to be achieved from the addition of Acera's synthetic tissue matrix technology into Solventum's existing advanced wound care portfolio. The goodwill is included in the Company’s MedSurg segment and is not deductible for tax purposes.

The purchase price allocations are considered preliminary as of December 31, 2025, with final estimates of fair value expected to be completed in the first half of 2026, but no later than one year after the acquisition date. A change in the estimated fair value of the net assets acquired will result in a corresponding change to the amount of the purchase price allocated to goodwill.

The results of operations of the acquired businesses and the pro forma impact of the acquisition is not material to the Company’s results of operations or financial condition.

Divestitures

Year Ended 2025 Divestitures

On February 25, 2025, the Company entered into a Transaction Agreement to sell its Purification and Filtration business to Thermo Fisher Scientific Inc. ("Buyer"). On June 25, 2025, the Company and Buyer entered into an Amended and Restated Transaction Agreement (the "Agreement") to exclude the Company’s drinking water filtration business (the "Water Business") from the scope of the Purification and Filtration business to be acquired by Buyer (such acquired business, the "Business").

On September 1, 2025, Solventum completed the sale of the Business to the Buyer. The cash consideration paid to Solventum at closing was approximately $4 billion, resulting in a pre-tax gain of approximately $1.5 billion. The pre-tax gain was recorded net of transaction fees of $86 million.

Under the Agreement, Buyer is entitled to receive a payment of up to $75 million from the Company either upon a sale of the Water Business or after an agreed upon 3-year period. The Company recorded $64 million within the other liabilities on the consolidated balance sheets, which was the present value of the expected future obligation at close of the Transaction.

In connection with the sale of the Business, the Company entered into various transition service agreements to provide certain support services at cost, below fair market value, for a period of up to 24 months from the closing of the sale. These transition services include product distribution and supply chain management, contract manufacturing, information technology, finance, customer support, among others. In connection with these agreements, the Company recognized an unfavorable contract liability of $113 million, which will be recognized over the terms of the agreements.

In 2025, the Company recognized approximately $56 million of transition service income, including amortization of the unfavorable contract liability, within selling, general and administrative expenses on the Company's consolidated statements of income. Sales and cost of sales associated with products sold to Buyer, as well as cost of products purchased from Buyer under the supply agreements were not material.

NOTE 4. Goodwill and Intangible Assets

Goodwill

The goodwill balance by business segment is as follows:


(Millions)	MedSurg		Dental Solutions		Health Information Systems		Purification and Filtration		All Other		Total
Balance as of December 31, 2023	$	3,685	$	458	$	873	$	1,519	$	—	$	6,535
Translation impact	(88)		(19)		(2)		(49)		—		(158)
Balance as of December 31, 2024	3,597		439		871		1,470		—		6,377
Acquisition activity	441		—		—		—		—		441
Divestiture activity	—		—		(2)		(1,389)		—		(1,391)
Translation and other	208		38		4		(81)		108		277

Balance as of December 31, 2025	$	4,246	$	477	$	873	$	—	$	108	$	5,704

The Company completed its annual goodwill impairment test in the fourth quarter of 2025 for all reporting units and determined that there was no impairment.

For the year ended December 31, 2025, there was $441 million of goodwill recorded from the acquisition of Acera on December 23, 2025. There were no acquisitions completed in 2024.

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


	December 31,
(Millions)	2025		2024
Customer related	$	2,099	$	2,720
Patents and technology	2,049		1,895
Tradenames and other	637		729
Total gross carrying amount	4,785		5,344

Accumulated amortization — customer related	(778)		(1,208)
Accumulated amortization — patents and technology	(1,122)		(1,224)
Accumulated amortization — tradenames and other	(293)		(368)
Total accumulated amortization	(2,193)		(2,800)

Total intangible assets — net	$	2,592	$	2,544

Amortization expense was as follows:


	Year ended December 31,

(Millions)	2025		2024		2023
Amortization expense	$	312	$	349	$	365

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


(Millions)						2026						2027						2028						2029						2030						After 2030
Amortization expense						$	361					$	356					$	351					$	313					$	208					$	1,003

NOTE 5. Supplemental Financial Information

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


	December 31,
(Millions)	2025		2024
Other current assets
Purification and Filtration-related	$	387	$	—
Prepaid income taxes	116		139
Prepaid IT expenses	58		34
Other	170		120
Total other current assets	$	731	$	293

Purification and Filtration-related in the table above includes receivables and other assets associated with post-closing activity with Buyer.

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


	December 31,
(Millions)	2025		2024
Other current liabilities
Accrued compensation	$	320	$	281
Accrued taxes	196		122
Accrued rebates	172		146
Accrued interest	71		114
Purification and Filtration-related	245		—
Other	389		378
Total other current liabilities	$	1,393	$	1,041

Purification and Filtration-related in the table above includes the current portion of the unfavorable contract liability as described in Note 3, along with other activity with Buyer, including amounts owed under the transition agreements, since the close of the Transaction.

NOTE 6. Property, Plant, and Equipment - Net

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


	December 31,
(Millions)	2025		2024
Property, plant and equipment - at cost
Buildings and leasehold improvements	$	870	$	956
Machinery and equipment	1,824		2,150
Construction in progress	499		504
Gross property, plant and equipment	3,193		3,610
Accumulated depreciation	(1,867)		(1,988)
Property, plant and equipment - net	$	1,326	$	1,622

Depreciation expense consisted of the following:


	Year ended December 31,
(Millions)	2025		2024		2023
Depreciation expense	$	151	$	181	$	164

NOTE 7. Supplemental Equity and Comprehensive Income Information

Share Repurchase Program

In November 2025, Solventum's Board of Directors approved a share repurchase program, which authorizes the Company to purchase up to $1 billion of the Company's outstanding common stock. There were no repurchases made under this program in 2025.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

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


(Millions)	Cumulative Translation Adjustment		Defined Benefit Pension		Cash Flow Hedging		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2022, net of tax	$	(504)	$	7	$	—	$	(497)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	157		(50)		—		107
Amounts reclassified out	—		—		—		—
Total other comprehensive income (loss), before tax	157		(50)		—		107
Tax effect	—		17		—		17
Total other comprehensive income (loss), net of tax	157		(33)		—		124
Transfers from 3M, net of tax	—		36		—		36
Balance at December 31, 2023, net of tax:	$	(347)	$	10	$	—	$	(337)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(239)		(44)		24		(259)
Amounts reclassified out	38		39		2		79
Total other comprehensive income (loss), before tax	(201)		(5)		26		(180)
Tax effect	(2)		—		(6)		(8)
Total other comprehensive income (loss), net of tax	(203)		(5)		20		(188)
Transfers from 3M, net of tax	—		(531)		—		(531)
Balance at December 31, 2024, net of tax:	$	(550)	$	(526)	$	20	$	(1,056)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	401		(1)		(35)		365
Amounts reclassified out	—		54		(1)		53
Total other comprehensive income (loss), before tax	401		53		(36)		418
Tax effect	19		(15)		8		12
Total other comprehensive income (loss), net of tax	420		38		(28)		430

Balance at December 31, 2025, net of tax	$	(130)	$	(488)	$	(8)	$	(625)

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 and postretirement plans: amounts were reclassified into other expense (income), net (see Note 10).
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 income taxes.

NOTE 8. Income Taxes

Income (loss) before income taxes consisted of the following:


	Year ended December 31,
(Millions)	2025		2024		2023
United States	$	592	$	(47)	$	1,221
International	1,121		652		446
Total	$	1,713	$	605	$	1,667

Provision (benefit) for income taxes consisted of the following:


	Year ended December 31,
(Millions)	2025		2024		2023
Currently payable
Federal	$	29	$	112	$	148
State	38		25		44
International	210		145		271
Deferred
Federal	43		(134)		(8)
State	(13)		(11)		(9)
International	(150)		(10)		(125)
Total	$	157	$	127	$	321

Components of deferred tax assets and (liabilities) are comprised of the following:


	December 31,
(Millions)	2025		2024
Deferred tax assets:
Miscellaneous accruals	$	51	$	42
Accrued compensation	164		159
Net operating/capital loss carryforward	67		55
Disallowed interest carryforwards	—		14
Foreign tax credits	41		35

Research and experimentation capitalization	42		129
Lease liabilities	47		32
Other deferred tax assets	22		28
Derivatives	19		(8)
Gross deferred tax assets	453		486
Valuation allowance	(37)		(33)
Total deferred tax assets	416		453

Deferred tax liabilities:
Property, plant, and equipment	(45)		(78)
Intangible assets	(226)		(278)
Right-of-use assets	(47)		(33)
Total deferred tax liabilities	(318)		(389)

Net deferred tax asset (liability)	$	98	$	64

As displayed in the table above, as of December 31, 2025, the Company has provided $37 million of valuation allowance against certain of these deferred tax assets based on management’s determination that it is more-likely-than-not that the tax benefits related to these assets will not be realized.

As of December 31, 2025, the Company had tax-effected operating loss and capital loss carryforwards of $67 million and tax credit carryforwards of $43 million for federal, state, and international jurisdictions, with all amounts before limitation impacts and valuation allowances. Federal and international tax attributes will expire after one to an indefinite carryover period and state tax attributes will expire after one to eighteen years.

As a result of our prospective adoption of ASU 2023-09, the following table presents income taxes paid, net of refunds, disaggregated by jurisdiction in accordance with the new disclosure requirements is provided below:


	Year ended December 31,
(Millions)	2025

U.S. federal	$	22
U.S. state and local	21
International
China	14
Germany	14
Ireland	54
Other international	56
Total	$	181

As previously disclosed, cash payments directly to tax authorities were $244 million for the year ended December 31, 2024.

In accordance with our prospective adoption of ASU 2023-09, the following table presents a reconciliation of the U.S. federal statutory income tax rate to Solventum's worldwide effective income tax rate is provided below:


	Year ended December 31,
	2025
(Millions)	Amount		Percent
U.S. federal statutory income tax rate	$	360	21.0	%
State and local income taxes, net of federal income tax effect (a)	20		1.2
Foreign tax effects
Cayman Islands
Statutory tax rate difference between Cayman Islands and United States	(173)		(10.0)
Ireland
Statutory tax rate difference between Ireland and United States	(52)		(3.0)
Other	23		1.3
Germany
Statutory tax rate difference between Germany and United States	20		1.1
Trade tax	(54)		(3.2)
Other	5		0.3
Japan
Purification and Filtration Divestiture	21		1.2
Other	(7)		(0.4)
Other foreign jurisdictions	46		2.7
Effect of changes in tax laws or rates exacted in the current period	10		0.6
Effect of cross-border tax laws
Global Intangible Low Taxed Income (GILTI)	52		3.0
Other	2		0.1
Tax credits	(16)		(0.9)
Changes in valuation allowances	—		—
Nontaxable or nondeductible items	22		1.3
Changes in unrecognized tax benefit	(8)		(0.5)
Other adjustments
Purification and Filtration Divestiture	(112)		(6.5)
Other	(2)		(0.1)
Effective tax rate	$	157	9.2	%

(a)State and local taxes in Illinois, Pennsylvania, and Maryland made up the majority (greater than 50 percent) of the tax effect in this category.

A reconciliation of the U.S. federal statutory income tax rate to Solventum's worldwide effective income tax rate is provided below:


	Year ended December 31,
(Millions)	2024		2023
U.S. Statutory income tax rate	21.0	%	21.0	%
State income taxes - net of federal benefit	1.8		1.7
International income taxes - net	(7.0)		(1.3)
Global Intangible Low Taxed Income (GILTI)	4.2		0.8
Foreign Derived Intangible Income (FDII)	(3.3)		(2.2)
U.S. research and development credit	(4.1)		(1.2)
Reserves for tax contingencies	(1.4)		(4.1)
Tax impact of legal entity restructuring	4.7		2.3
Changes in valuation allowance	2.6		1.4
Deferred rate change	0.9		0.1
All other - net	1.5		0.8
Effective income tax rate	20.9	%	19.3	%

The effective income tax rate for 2025 was 9.2%, compared to 20.9% in 2024, a decrease of 11.7 percentage points. The primary factors that decreased the tax rate were the tax impacts of the Purification and Filtration divestiture recognized in various jurisdictions and favorable changes in the jurisdictional mix of earnings.

The Company recognizes the amount of income tax benefit that has a greater than 50% likelihood of being ultimately realized upon settlement. Changes in unrecognized tax benefits impacting the provision for income taxes of the Company have been reflected in the consolidated statements of income. Interest and penalties are also recognized in the provision for income taxes in the consolidated statements of income. For uncertain tax positions that the Company expects to be legally liable for, the unrecognized tax benefits and interest and penalties of $49 million and $36 million have been recorded to "Other liabilities" as of December 31, 2025 and 2024, respectively on the consolidated balance sheets. For uncertain tax positions where the Company is not legally and directly liable for, unrecognized tax benefits and interest and penalties are charged to "Net parent investment" on the consolidated balance sheets. A rollforward of unrecognized tax benefits ("UTB") is as follows:


(Millions)	2025		2024		2023
Gross UTB Balance at January 1	$	137	$	205	$	307

Increase (decrease) for tax positions of the current year	(3)		4		22
Increase (decrease) for tax positions of prior years	(5)		(64)		(18)


Settlements with tax authorities	—		—		—
Reductions due to lapse of applicable statute of limitations	(6)		(8)		(74)
Reductions for amounts recorded to net parent investment	—		—		(32)

Gross UTB Balance at December 31	$	123	$	137	$	205

The total amount of UTB, if recognized, would affect the effective tax rate by $127 million as of December 31, 2025. The Company has ongoing federal, state and international income tax audits in various jurisdictions and evaluates uncertain tax positions that may be challenged by local tax authorities and not fully sustained. These uncertain tax positions are reviewed on an ongoing basis and adjusted in light of facts and circumstances including progression of tax audits, developments in case law and closing statutes of limitation.

There is audit activity in several U.S. Federal, state and foreign jurisdictions where the Company is subject to ongoing tax examinations and governmental assessments, which could be impacted by evolving political environments in those jurisdictions. As of December 31, 2025, no taxing authority proposed significant adjustments to the Company’s tax positions for which the Company is not adequately reserved.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. The Company recognized in the consolidated statements of income on a gross basis approximately $0.1 million of benefit, $1.0 million of benefit, and $7.5 million of benefit in 2025, 2024 and 2023, respectively. The amount of interest and penalties recognized may be an expense or benefit due to new or remeasured unrecognized tax benefit accruals. At December 31, 2025 and 2024, accrued interest and penalties in the consolidated balance sheets on a gross basis were $5.3 million and $5.3 million, respectively.

As of December 31, 2025, the Company provides for deferred taxes associated with foreign earnings in certain subsidiaries that are not considered permanently reinvested. The Company has not provided deferred taxes on approximately $1 billion of undistributed earnings from non-U.S. subsidiaries which are indefinitely reinvested in operations. It is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely.

NOTE 9. 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 December 31, 2025 and 2024 consisted of the following:


(Millions)	Currency/ Fixed vs. Floating	Effective Interest Rate			Final Maturity Date		Carrying Value
Description				December 31, 2025		December 31, 2024
Eighteen month senior term loan credit facility	USD Floating	—	%		2025		$	—	$	200
Three year senior term loan credit facility	USD Floating	5.10			2027		110		979
$1 billion 5.45 percent three year senior notes	USD Fixed	5.37			2027		349		995
$1.5 billion 5.40 percent five year senior notes	USD Fixed	5.21			2029		698		1,487
$1 billion 5.45 percent seven year senior notes	USD Fixed	5.22			2031		991		990
$1.65 billion 5.60 percent ten year senior notes	USD Fixed	5.37			2034		1,636		1,636
$1.25 billion 5.90 percent thirty year senior notes	USD Fixed	5.86			2054		1,209		1,231
$500 million 6.00 percent forty year senior notes	USD Fixed	5.95			2064		42		492
Other borrowings							—		—
Total long-term debt							5,035		8,010
Less: current portion of long-term debt							—		200
Long-term debt (excluding current portion)							$	5,035	$	7,810

Senior Notes

The Company’s borrowings include $5.0 billion aggregate principal amount of senior notes 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"). 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. 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.

In September 2025, the Company repurchased multiple series of its outstanding Senior Notes via cash tender offers with a combined aggregate principal amount of $1.9 billion: $650 million aggregate principal amount of 5.45% senior notes due 2027, $797 million aggregate principal amount of 5.40% senior notes due 2029, $22 million aggregate principal amount of 5.90% senior notes due 2054, and $458 million aggregate principal amount of 6.00% senior notes due 2064. Neither the 5.45% senior notes due 2031 nor the 5.60% senior notes due 2034 were tendered.

As a result of tendering a portion of its Senior Notes, the Company recognized a loss on debt extinguishment of approximately $94 million within loss on debt extinguishment, net within its consolidated statements of income, the cash outflow for which is recorded within other financing activities within its consolidated statements of cash flows. This loss on extinguishment reflects the difference between the carrying value and the amount paid to acquire the tendered Senior Notes and related expenses.

Credit Facilities

On February 16, 2024, the Company entered into credit agreements providing for:

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"); and
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 Term Loan Credit Facilities have a floating interest rate based on a Secured Overnight Financing Rate ("SOFR") index.

At December 31, 2025, there are no amounts outstanding under the 5-year Revolving Credit Facility.

There were no amounts outstanding under the eighteen month senior unsecured term loan facility when it reached maturity in August 2025. For the year ended 2025, the Company prepaid $870 million of the aggregate principal amount outstanding under the three year senior unsecured term loan credit facility.

Commercial Paper

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


2026						2027						2028						2029						2030						After 2030						Total
$	—					$	460					$	—					$	703					$	—					$	3,920					$	5,083

Financial Instruments Not Measured at Fair Value

The fair values of cash equivalents, accounts receivable, and accounts payable approximated carrying values because of the short-term nature of these instruments. At December 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 $5.2 billion compared to a carrying value of $5.0 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. 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.

NOTE 10. Pension and Postretirement Benefit Plans

Transfer of Pension and Postretirement Benefit Plans

Historically, certain employees of Solventum participated in U.S. and non-U.S. retirement plans sponsored by 3M. In preparation for the Spin-Off, certain defined benefit plan obligations and assets relating to active Solventum employees and retirees were legally transferred from 3M Company to Solventum. Upon legal transfer, the related assets and liabilities were reflected in the consolidated balance sheets. These amounts are disclosed as "Transfers from 3M" in the following tables, and the net periodic benefit costs are included in the consolidated statements of income. Prior to the legal transfer, these plans were accounted for as multiemployer plans and a proportionate allocation of service costs associated with the Solventum employees was reflected in the consolidated statements of income. Expenses associated with employees' participation in 3M Company sponsored pension plans were $5 million and $32 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, all of the defined benefit plan obligations, all associated U.S. plan assets and the majority of the associated international plan assets related to Solventum employees had transferred from 3M to Solventum. Assets that were not yet delivered from 3M-sponsored pension plans due to regulatory purposes were recognized as receivables within Solventum's plan assets as of December 31, 2024, and were transferred to Solventum in June 2025.

In total, Solventum has more than 25 defined-benefit pension plans in 14 countries. Pension benefits associated with these plans generally are based on each participant’s years of service, compensation, and age at retirement or termination. The primary U.S. defined-benefit pension plan was closed to new participants effective January 1, 2009. Prior to the Spin-Off, 3M committed to the future freeze of U.S. defined benefit pension benefits for non-union U.S. employees, effective December 31, 2028. As a successor plan to the 3M plan, the Solventum U.S. defined-benefit pension plan will also cease accruing benefits for non-union participants after December 31, 2028.

In addition, Solventum offers certain postretirement health care and life insurance benefits for U.S. employees who reach a retirement age while employed by the Company and who were employed prior to January 1, 2016. The related plan obligations and associated plan assets are reflected in the following tables. Most international employees and retirees are covered by government health care programs. The cost of company-provided postretirement health care plans for international employees is not material.

Assets of the U.S. qualified defined benefit pension plan and U.S. postretirement plans are held by independent trustees. There are no plan assets in the U.S. non-qualified plan due to its nature. 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.

The following tables include a reconciliation of the beginning and ending balances of the Company-sponsored benefit obligations and the fair value of plan assets, as well as a summary of the related amounts recognized in the consolidated balance sheets as of December 31 of the respective years:


	Qualified and Non-qualified Pension Benefits								Postretirement Benefits
	United States				International
(Millions)	2025		2024		2025		2024		2025		2024
Change in benefit obligation
Benefit obligation at beginning of year	$	1,857	$	—	$	611	$	519	$	250	$	—
Service cost	24		20		19		18		3		3
Interest cost	96		70		22		19		13		9
Participant contributions	—		—		1		1		—		—
Foreign exchange rate changes	—		—		69		(36)		—		—
Actuarial (gain) loss	90		(9)		(56)		(4)		2		(10)
Benefit payments	(142)		(96)		(16)		(10)		(16)		(11)
Settlements, curtailments, and special termination benefits	(10)		(2)		13		1		(1)		(1)
Divestitures	(2)		—		(48)		—		—		—
Transfers from 3M	—		1,874		—		103		—		260
Benefit obligation at end of year	$	1,913	$	1,857	$	615	$	611	$	251	$	250
Change in plan assets
Fair value of plan assets at beginning of year	$	1,785	$	—	$	471	$	367	$	132	$	—
Actual return on plan assets	143		48		19		15		10		3
Company contributions	4		3		21		16		1		1
Participant contributions	—		—		1		1		—		—
Foreign exchange rate changes	—		—		52		(28)		—		—
Benefit payments	(142)		(96)		(16)		(10)		(16)		(11)
Settlements, curtailments, and special termination benefits	(2)		(2)		—		—		—		(1)
Divestitures	(2)		—		(22)		—		—		—
Transfers from 3M	—		1,832		—		110		—		140
Fair value of plan assets at end of year	1,786		1,785		526		471		127		132
Funded status at end of year	$	(127)	$	(72)	$	(89)	$	(140)	$	(124)	$	(118)


Amounts recognized in the Consolidated Balance Sheets as of December 31, (Millions)		Qualified and Non-qualified Pension Benefits												Postretirement Benefits
	United States						International
	2025			2024			2025			2024			2025			2024
Other assets		$	—		$	—		$	20		$	18		$	—		$	—
Accrued benefit cost
Current liabilities		(2)			(2)			(2)			(3)			(1)			(1)
Non-current liabilities		(125)			(70)			(107)			(155)			(123)			(117)
Ending balance		$	(127)		$	(72)		$	(89)		$	(140)		$	(124)		$	(118)


Amounts recognized in accumulated other comprehensive (income) loss as of December 31, (Millions)		Qualified and Non-qualified Pension Benefits												Postretirement Benefits
	United States						International
	2025			2024			2025			2024			2025			2024
Net actuarial loss (gain)		$	655		$	658		$	(46)		$	4		$	45		$	47
Prior service cost (credit)		—			—			—			—			(14)			(15)
Ending balance		$	655		$	658		$	(46)		$	4		$	31		$	32

The balance of amounts recognized for non-U.S. plans in accumulated other comprehensive income (loss) as of December 31, 2025 and December 31, 2024 in the preceding table is presented based on the foreign currency exchange rates on that date.

The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels. The following table summarizes the total accumulated benefit obligations, the accumulated benefit obligations and fair value of plan assets for defined benefit pension plans with accumulated benefit obligations in excess of plan assets, and the projected benefit obligation and fair value of plan assets for defined benefit pension plans with projected benefit obligation in excess of plan assets as of December 31, 2025 and December 31, 2024:


	Qualified and Non-qualified Pension Plans
	United States				International
(Millions)	2025		2024		2025		2024
Accumulated benefit obligation	$	1,848	$	1,775	$	573	$	558
Plans with accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation	$	1,848	$	22	$	461	$	405
Fair value of plan assets	1,786		—		381		285
Plans with projected benefit obligation in excess of plan assets
Projected benefit obligation	$	1,913	$	1,857	$	495	$	452
Fair value of plan assets	1,786		1,785		387		294

Components of Net Periodic Cost and Other Amounts Recognized in Other Comprehensive Income:

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 expenses, and research and development expenses. As discussed in Note 7, the other components of net periodic benefit cost are reflected in other expense (income), net. Components of net periodic benefit cost and other supplemental information for the respective years ended December 31 are as follows:


	Qualified and Non-qualified Pension Benefits												Postretirement Benefits
	United States						International
(Millions)	2025		2024		2023		2025		2024		2023		2025		2024		2023
Net periodic benefit cost (benefit)
Operating expense
Service cost	$	24	$	20	$	—	$	19	$	18	$	5	$	3	$	3	$	—
Non-operating expense
Interest cost	96		70		—		22		19		7		13		9		—
Expected return on plan assets	(122)		(103)		—		(24)		(20)		(3)		(9)		(7)		—
Amortization of prior service benefit	—		(2)		—		—		—		—		(1)		(3)		—
Amortization of net actuarial loss	62		40		—		1		—		—		3		3		—
Settlements, curtailments, and special termination benefits	1		1		—		—		1		—		—		—		—
Total non-operating expense (benefit)	37		6		—		(1)		—		4		6		2		—
Total net periodic benefit cost (benefit)	$	61	$	26	$	—	$	18	$	18	$	9	$	9	$	5	$	—
Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss
Amortization of transition asset	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Amortization of prior service benefit	—		2		—		—		—		—		1		3		—
Net actuarial (gain) loss	69		46		—		(52)		1		52		1		(6)		—
Amortization of net actuarial loss	(62)		(40)		—		(1)		—		1		(3)		(3)		—
Foreign currency	—		—		—		(3)		—		(2)		—		—		—
Settlements, curtailments, and special termination benefits	(9)		(1)		—		6		—		(1)		(1)		—		—
Total recognized in other comprehensive (income) loss	(2)		7		—		(50)		1		50		(2)		(6)		—
Total recognized in net periodic benefit cost (benefit) and other comprehensive (income) loss	$	59	$	33	$	—	$	(32)	$	19	$	59	$	7	$	(1)	$	—

Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31:


	Qualified and Non-qualified Pension Benefits												Postretirement Benefits
	United States						International
	2025		2024		2023		2025		2024		2023		2025		2024		2023
Discount rate	5.40	%	5.64	%	—	%	4.02	%	3.54	%	3.30	%	5.31	%	5.60	%	—	%
Compensation rate increase	3.77	%	3.77	%	—	%	2.82	%	2.88	%	2.90	%	N/A		N/A		N/A

Weighted-Average Assumptions Used to Determine Net Cost for Years Ended December 31:


	Qualified and Non-qualified Pension Benefits												Postretirement Benefits
	United States						International
	2025		2024		2023		2025		2024		2023		2025		2024		2023
Discount rate - service cost	5.74	%	5.31	%	—	%	3.71	%	3.43	%	4.88	%	5.79	%	5.30	%	—	%
Discount rate - interest cost	5.43		5.20		—		3.50		3.37		5.24		5.32		5.14		—
Expected return on assets	7.25		7.75		—		4.78		4.69		4.61		7.24		7.85		—
Compensation rate increase	3.77		3.77		—		2.88		2.89		2.89		N/A		N/A		N/A

The U.S. postretirement health care benefit plan is a savings account benefit-based plan. The contributions provided by the Company to the health savings accounts increase 3% per year for employees who retired prior to January 1, 2016 and 1.5% for employees who retire on or after January 1, 2016. Therefore, the Company does not have material exposure to health care cost inflation related to its retirees.

The Company determines the discount rate to measure plan liabilities as of the December 31 measurement date for the pension and postretirement benefit plans. The discount rate reflects the current rate at which the associated liabilities could be effectively settled. The Company sets its rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits. Actuarial losses in 2025 and gains in 2024 related to projected benefit obligations were primarily the result of changes in discount rates.

The Company measures service cost and interest cost separately using the spot yield curve approach applied to each corresponding obligation. Service costs are determined based on duration-specific spot rates applied to the service cost cash flows. The interest cost calculation is determined by applying duration-specific spot rates to the year-by-year projected benefit payments. The spot yield curve approach does not affect the measurement of the total benefit obligations as the change in service and interest costs offset in the actuarial gains and losses recorded in other comprehensive income.

In 2025, the Company’s assumption for the expected return on plan assets for the primary U.S. qualified pension plan was 7.25%. The expected return assumption is based on the strategic asset allocation of the plan, long-term capital market return expectations and expected performance from active investment management. As of December 31, 2025, the Company’s 2026 expected long-term rate of return on U.S. plan assets is 7.50%, which is based on an asset allocation assumption of 10% global equities, 15% private equities, 61% fixed-income securities, and 14% absolute return investments independent of traditional performance benchmarks, along with positive returns from active investment management. The actual net rate of return on plan assets in 2025 was 8.4%. Return on assets assumptions for international pension plans are calculated on a plan-by-plan basis using plan asset allocations and expected long-term rate of return assumptions.

In 2026, the Company expects to contribute $22 million to its international pension plans. The Company does not have required minimum cash contributions for its U.S. pension or postretirement plans for 2026. Future contributions will depend on market conditions, interest rates and other factors.

Future Pension and Postretirement Benefit Payments

The following table provides the estimated pension and postretirement benefit payments that are payable from the plans to participants:


	Qualified and Non-qualified Pension Benefits				Postretirement Benefits
(Millions)	United States		International
2026 Benefit payments	$	165	$	25	$	21
2027 Benefit payments	160		27		21
2028 Benefit payments	161		29		21
2029 Benefit payments	156		31		22
2030 Benefit payments	155		31		22
Next five years	724		180		99

Plan Asset Management

Solventum's investment strategy for its pension and postretirement plans is to manage the funds on a going-concern basis. The primary goal is to meet the obligations as required. The secondary goal is to earn the highest rate of return possible, without jeopardizing its primary goal, and without subjecting the Company to an undue amount of contribution risk. Fund returns are used to help finance present and future obligations to the extent possible within actuarially determined funding limits and tax-determined asset limits, thus reducing the potential need for additional contributions from the Company. The investment strategy has used long duration cash bonds and derivative instruments to offset a significant portion of the interest rate sensitivity of pension liabilities.

Normally, Solventum does not buy or sell any of its own securities as a direct investment for its pension and other postretirement benefit funds. However, due to external investment management of the funds, the plans may indirectly buy, sell or hold Solventum securities. The aggregate amount of Solventum securities are not considered to be material relative to the aggregate fund percentages.

The discussion that follows references the fair value measurements of certain assets in terms of levels 1, 2 and 3. See Note 1 for descriptions of these levels. While the company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

U.S. Pension Plan and Postretirement Benefit Plan Assets

The U.S. pension plan assets and U.S. postretirement plan assets are held in a master trust and are invested with the same investment objectives. In order to achieve the investment objectives, the investment policies include a target strategic asset allocation. The investment policies allow some tolerance around the target in recognition that market fluctuations and illiquidity of some investments may cause the allocation to a specific asset class to vary from the target allocation, potentially for long periods of time. Acceptable ranges have been designed to allow for deviation from strategic targets and to allow for the opportunity for tactical over- and under-weights. The portfolios will normally be rebalanced when the quarter-end asset allocation deviates from acceptable ranges. The allocation is reviewed regularly by the named fiduciary of the plans.

The fair values of the assets held by the U.S. pension and postretirement benefit plans by asset class are as follows:


	Fair Value Measurements Using Inputs Considered as												Investments Measured at Net Asset Value*				Fair Value at December 31,
	Level 1				Level 2				Level 3
(Millions)	2025		2024		2025		2024		2025		2024		2025		2024		2025		2024
U.S. Pension Plans
Cash and cash equivalents	$	29	$	333	$	—	$	—	$	—	$	—	$	—	$	—	$	29	$	333
Equities	—		180		—		—		—		—		191		—		191		180
Fixed income	225		35		747		701		—		—		—		—		972		736
Absolute return	—		—		—		—		—		—		271		245		271		245
Private equity	—		—		—		—		—		—		304		283		304		283
Total	$	254	$	548	$	747	$	701	$	—	$	—	$	766	$	528	$	1,767	$	1,777
Other items to reconcile to fair value of plan assets																	19		8
Fair value of plan assets																	$	1,786	$	1,785

Postretirement Benefit Plans
Cash and cash equivalents	$	2	$	25	$	—	$	—	$	—	$	—	$	—	$	—	$	2	$	25
Equities	—		13		—		—		—		—		14		—		14		13
Fixed income	16		3		53		52		—		—		—		—		69		55
Absolute return	—		—		—		—		—		—		19		18		19		18
Private equity	—		—		—		—		—		—		22		21		22		21
Total	$	18	$	41	$	53	$	52	$	—	$	—	$	55	$	39	$	126	$	132
Other items to reconcile to fair value of plan assets																	1		—
Fair value of plan assets																	$	127	$	132

*In accordance with ASC 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding and is determined by the investment manager or custodian of the fund. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the fair value of plan assets.

Equities consist primarily of mandates in public equity securities managed to various public equity indices. Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded. Common collective trusts that invest in equity securities are valued at NAV.

Fixed income investments include domestic government and corporate debt securities, as well as bond futures. The debt securities are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings. Futures are valued at the closing price reported in active market in which the derivative is traded.

Absolute return consists primarily of private partnership interests in hedge funds valued at NAV.

The private equity portfolio consists of partnership interests valued at NAV.

Other items to reconcile to fair value of plan assets as of December 31, 2025 include interest receivables and receivables for investments sold. Other items to reconcile to fair value of plan assets as of December 31, 2024 include interest receivables.

International Pension Plan Assets

Outside the U.S., pension plan assets are typically managed by decentralized fiduciary committees. The disclosure below of asset categories is presented in aggregate for the 13 defined benefit plans in 9 countries, which have plan assets; however, there is significant variation in asset allocation policy from country to country. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment allocation process in each country. The Company provides standard funding and investment guidance to all international plans with more focused guidance to the larger plans. Each plan has its own strategic asset allocation. The asset allocations are reviewed periodically and rebalanced when necessary.

The fair values of the assets held by the international pension plans by asset class are as follows:


	Fair Value Measurements Using Inputs Considered as												Investments Measured at Net Asset Value*				Fair Value at December 31,
	Level 1				Level 2				Level 3
(Millions)	2025		2024		2025		2024		2025		2024		2025		2024		2025		2024
Cash and cash equivalents	$	5	$	3	$	—	$	—	$	—	$	—	$	—	$	—	$	5	$	3
Equities	7		5		64		29		—		—		28		19		99		53
Fixed income	7		6		303		217		—		—		20		20		330		243
Absolute return	—		—		—		—		35		33		31		3		66		36
Private equity	—		—		—		—		—		—		46		48		46		48
Total	$	19	$	14	$	367	$	246	$	35	$	33	$	125	$	90	$	546	$	383
Other items to reconcile to fair value of plan assets																	(20)		88
Fair value of plan assets																	$	526	$	471

*In accordance with ASC 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, then divided by the number of units outstanding, and is determined by the investment manager or custodian of the fund. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the fair value of plan assets.

Equities consist primarily of mandates in public equity securities managed to various public equity indices. Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded. Commingled funds are valued using the NAV provided by the fund administrator. Assets in the Level 2 category have a quoted market price.

Fixed income investments include domestic and foreign government, and corporate debt securities. The debt securities are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings. Commingled funds are valued using the NAV provided by the fund administrator. Assets in the Level 2 category have a quoted market price.

Absolute return consists of insurance contracts, which are valued using cash surrender values which is the amount the plan would receive if the contract were cashed out at year end, and commingled funds that invest in real estate, which are valued at NAV.

Private equity funds consist of partnership interests in a variety of funds which are valued at NAV as described above.

Other items to reconcile to fair value of plan assets as of December 31, 2025 include payables related to plan assets that are legally due to Buyer as a result of the divestiture of the Purification and Filtration business, which will be transferred to the Buyer in 2026. Other items to reconcile to fair value of plan assets as of December 31, 2024 include a receivable from a 3M-sponsored pension plan that was transferred to the Solventum-sponsored pension plan in 2025.

The balances of and changes in the fair values of the international pension plans’ level 3 assets consist primarily of insurance contracts under the absolute return asset class which were transferred from 3M plans; these investments have few transactions.

Defined Contribution Plans

The Company also sponsors employee savings plans under Section 401(k) of the Internal Revenue Code. These plans are offered to substantially all regular U.S. employees. For eligible employees hired prior to January 1, 2009, employee 401(k) contributions of up to 5% of eligible compensation are matched in cash at rates of 45% or 60%, depending on the plan in which the employee participates. Employees hired on or after January 1, 2009, receive a cash match of 100% for employee 401(k) contributions of up to 5% of eligible compensation and receive an employer retirement income account cash contribution of 3% of the participant’s total eligible compensation. All contributions are invested in a number of investment funds pursuant to employees’ elections. Solventum subsidiaries in various international countries also participate in defined contribution plans. For the year ended December 31, 2025, expense related to the U.S. defined contribution plans was $100 million, and expense related to international defined contribution plans was $31 million. For the year ended December 31, 2024, expense related to the U.S. defined contribution plans was $93 million, and expense related to international defined contribution plans was $24 million. Prior to 2024, employees received employer contributions as part of 3M-sponsored plans.

NOTE 11. Derivatives

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

Cash Flow Hedging - Foreign Currency Forward Contracts: The Company enters into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies. These transactions are designated as cash flow hedges. The settlement or extension of these derivatives will result in reclassifications (from accumulated other comprehensive income) to earnings in the period during which the hedged transactions affect earnings. Solventum may de-designate these cash flow hedge relationships in advance of the occurrence of the forecasted transaction. The portion of gains or losses on the derivative instrument previously included in accumulated other comprehensive income (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 24 months.

As of December 31, 2025, the Company had a balance of $8 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 December 31, 2025, Solventum expects to reclassify to earnings approximately $6 million after-tax net unrealized loss over the next 12 months based on exchange rates as of December 31, 2025.

Fair Value Hedges - The Company enters into interest rate swaps to manage its exposure to changes in fair value of the Company's fixed-rate debt. Under these arrangements, the Company agrees to exchange, at specific intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. Gains and losses associated with interest rate swaps and changes in fair value of the hedged debt are recorded to interest expense in the period they occur.

In December 2025, the Company entered into a $100 million notional fixed-to-floating interest rate swap with a maturity date of March 2033. In January 2026, the Company entered into an additional $100 million notional fixed-to-floating interest rate swap with a maturity date of March 2031. In February 2026, the Company entered into an additional $100 million notional fixed-to-floating interest rate swap with a maturity date of March 2033. These derivatives were designated as fair value hedges of the Company's Senior Notes.

At December 31, 2025, the total notional amount of interest rate swaps designated as fair value hedges was $100 million.

Net Investment Hedges - The Company enters into cross-currency swaps to hedge portions of the Company's investment in foreign operations 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.

At December 31, 2025, the total notional amount of cross-currency swaps designated as net investment hedges was approximately $1.2 billion.

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.

During the third quarter of 2025, the Company entered into $200 million notional fixed-to-floating forward interest rate swaps and $400 million notional treasury locks in connection with the anticipated closing of the Purification and Filtration sale and planned purchase of a portion of our outstanding registered debt. These instruments were settled during the third quarter of 2025 for a gain of $11 million that was reflected within loss on debt extinguishment, net on the consolidated statements of income.

Statement of Income Location and Impact of Cash Flow 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 year ended December 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 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 consolidated balance sheets. Notional amounts below are presented at period end foreign exchange rates.


		Gross Notional Amount						Assets							Liabilities
(Millions)				Location			Fair Value Amount				Location			Fair Value Amount
	December 31,							December 31,						December 31,
	2025			2024				2025	2024					2025		2024
Derivatives designated as hedging instruments
Foreign currency forward contracts		$	293		$	355		Other current assets	$	3		$	17		Other current liabilities		$	10	$	—
Foreign currency forward contracts		96			157			Other assets	1			6			Other liabilities		2		—
Interest rate swaps		100			—			Other assets	—			—			Other liabilities		1		—
Cross-currency swaps		1,185			380			Other assets	—			10			Other liabilities		71		—
Total derivatives designated as hedging instruments		$	1,674		$	892			$	4		$	33				$	84	$	—

Derivatives not designated as hedging instruments
Foreign currency forward contracts		$	481		$	397		Other current assets	$	1		$	—		Other current liabilities		$	3	$	—

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 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.

Credit Risk and Offsetting of Assets and Liabilities of Derivative Instruments: The Company is exposed to credit loss in the event of nonperformance by counterparties in forward contracts. However, the Company’s risk is limited to the fair value of the instruments. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties. Solventum enters into master netting arrangements with counterparties, which may allow each counterparty to net settle amounts owed between a Solventum entity and the counterparty as a result of multiple, separate derivative transactions. The Company does not anticipate nonperformance by any of these counterparties.

Solventum has elected to present the fair value of derivative assets and liabilities within the Company’s 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. For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at

the end of the reporting period based on the Solventum entity that is a party to the transactions. Derivatives not subject to master netting agreements are not eligible for net presentation. For the periods presented, Solventum has not received cash collateral from derivative counterparties.

NOTE 12. Commitments and Contingencies

Legal Proceedings

Solventum is involved in numerous claims and lawsuits, principally in the United States, and regulatory proceedings worldwide. These claims, lawsuits and proceedings relate to matters including, but not limited to, product liability (involving products that the Company now or formerly manufactured and sold, including products made by the Health Care Business Group at 3M), intellectual property, commercial, antitrust, federal healthcare program related laws and regulations, such as the False Claims Act and anti-kickback laws in the United States and other jurisdictions. Unless otherwise stated, Solventum is vigorously defending all such litigation and proceedings. From time to time, Solventum also receives subpoenas, investigative demands or requests for information from various government agencies in the United States and foreign countries. Solventum generally responds in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. Such requests can also lead to the assertion of claims or the commencement of administrative, civil, or criminal legal proceedings against Solventum and others, as well as to settlements. The outcomes of legal proceedings and regulatory matters are often difficult to predict. Any determination that the Company’s operations or activities are not, or were not, in compliance with applicable laws or regulations could result in the imposition of fines, civil or criminal penalties, and equitable remedies, including disgorgement, suspension or debarment or injunctive relief.

Process for Disclosure and Recording of Liabilities Related to Legal Proceedings

Many lawsuits and claims involve highly complex issues relating to causation, scientific evidence, and alleged actual damages, all of which are otherwise subject to substantial uncertainties. Assessments of lawsuits and claims can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. The categories of legal proceedings in which the Company is involved may include multiple lawsuits and claims, may be spread across multiple jurisdictions and courts that may handle the lawsuits and claims differently, may involve numerous and different types of plaintiffs, raising claims and legal theories based on specific allegations that may not apply to other matters, and may seek substantial compensatory and, in some cases, punitive, damages. These and other factors contribute to the complexity of these lawsuits and claims and make it difficult for the Company to predict outcomes and make reasonable estimates of any resulting losses. The Company's ability to predict outcomes and make reasonable estimates of potential losses is further influenced by the fact that a resolution of one or more matters within a category of legal proceedings may impact the resolution of other matters in that category in terms of timing, amount of liability, or both.

When making determinations about recording liabilities related to legal proceedings, the Company complies with the requirements of ASC 450, Contingencies, and related guidance, and records liabilities in those instances where it can reasonably estimate the amount of the loss and when the loss is probable. Where the reasonable estimate of the probable loss is a range, the Company records as an accrual in its financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate. The Company either discloses the amount of a possible loss or range of loss in excess of established accruals if estimable, or states that such an estimate cannot be made. The Company discloses significant legal proceedings even where liability is not probable or the amount of the liability is not estimable, or both, if the Company believes there is at least a reasonable possibility that a loss may be incurred. Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each period, and whether a loss previously determined to not be reasonably estimable and/or not probable is now able to be reasonably estimated or has become probable. Where appropriate, the Company makes additions to or adjustments of its reasonably estimated losses and/or accruals. As a result, the current accruals and/or estimates of loss and the estimates of the potential impact on the Company’s 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 2025 and 2024, the Company recognized $22 million and $8 million in legal charges, respectively. During 2025 and 2024, the Company made payments of $16 million and $6 million, respectively, related to a legal settlement, which reduced the accrued litigation balance. At December 31, 2025 and December 31, 2024, accrued litigation costs were $31 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. Many of the matters described herein are at varying stages, seek an indeterminate amount of damages or seek damages in amounts that the Company believes are not indicative of the ultimate losses that may be incurred. It is not uncommon for claims to be resolved over many years. As a matter progresses, the Company may receive information, through plaintiff demands, through discovery, in the form of reports of purported experts, or in the context of settlement or mediation discussions that purport to quantify an amount of

alleged damages, but with which the Company may not agree. Such information may or may not lead the Company to determine that it is able to make a reasonable estimate as to a probable loss or range of loss in connection with a matter. However, even when a loss or range of loss is not probable and reasonably estimable, developments in, or the ultimate resolution of, a matter could be material to the Company and could have a material adverse effect on the Company, its consolidated financial position, results of operations and cash flows. In addition, future adverse rulings or developments, or settlements in, one or more matters could result in future changes to determinations of probable and reasonably estimable losses in other matters.

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

The Company estimates insurance receivables based on an analysis of the terms of its numerous policies, including their exclusions, pertinent case law interpreting comparable policies, its experience with similar claims, and assessment of the nature of the claim and remaining coverage, and records an amount it has concluded is recognizable and expects to receive in light of the loss recovery and/or gain contingency models under ASC 450, ASC 610-30, and related guidance. For those insured legal proceedings for which the Company has recorded an accrued liability in its financial statements, the Company also records receivables for the amount of insurance that it concludes as recognizable from the Company’s insurance program. For those insured matters for which the Company has not recorded an accrued liability because the liability is not probable or the amount of the liability is not estimable, or both, but for which the Company has incurred an expense in defending itself, the Company records receivables for the amount of insurance that it concludes as recognizable for the expense incurred.

Product Liability Litigation

The following sections first describe the significant legal proceedings in which the Company is involved, and then describe the liabilities, if any, the Company has accrued relating to its significant legal proceedings.

3M is a named defendant in over 8,400 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 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 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; however, those decisions were subsequently reversed by the U.S. Court of Appeals for the Eighth Circuit. The parties are actively litigating several MDL bellwether and state court cases, with trials anticipated in 2026.

In addition to the federal MDL cases, there are eight state court personal injury cases relating to the Bair Hugger patient warming systems, including a multi-plaintiff case of amputees in Ramsey County, Minnesota. 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.

In June 2016, 3M was served with a putative class action filed in the Ontario Superior Court of Justice for all Canadian residents who underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections that the representative plaintiff claims were due to the use of the Bair Hugger patient warming system. 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 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.

Federal False Claims Act/Qui Tam Litigation

In October 2019, 3M acquired Acelity, Inc. and its KCI subsidiaries, including Kinetic Concepts, Inc. and KCI USA, Inc.

In 2008, two former employees filed qui tam actions against Kinetic Concepts, Inc. and KCI USA, Inc. (collectively, the “KCI Defendants”) alleging that the KCI Defendants violated the federal False Claims Act by submitting false or fraudulent claims to federal healthcare programs related to billing for 3M V.A.C. Therapy. One qui tam action (the Godecke case) was dismissed in January 2022.

In the remaining action (the Hartpence case), the litigation remained in a pre-trial stage through July 2023 when the parties agreed to mediate the matter. The parties updated the court periodically during their mediation and subsequent negotiation of an agreement to settle the matter. The parties entered into an agreement resolving the matter on May 15, 2025. On July 2, 2025, pursuant to that agreement, the relator-plaintiff filed a joint stipulation of voluntary dismissal, dismissing the matter with prejudice as to the relator-plaintiff and without prejudice as to the United States. On July 3, 2025, the court entered an order dismissing the matter consistent with the parties’ stipulation.

Warranties/Guarantees

The Company had approximately $82 million and $40 million in bank guarantees, surety bonds, and other similar instruments issued and outstanding at December 31, 2025 and 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.

NOTE 13. Leases

Solventum's lease arrangements include both operating and finance leases. Amounts associated with finance leases were not material to the consolidated financial statements for all periods presented.

During 2024, Solventum entered into a finance lease arrangement through April 2046 for the future location of the Company's principal office in Eagan, Minnesota. The new location will include office, R&D and manufacturing space. The lease will commence on the date that construction is complete and control of the location is transferred to the Company, which is anticipated to be the first quarter of 2026. The Company will record approximately $200 million of finance lease right-of-use assets with corresponding finance lease liabilities upon commencement.


	Year ended December 31,
(Millions)	2025		2024		2023
Operating lease cost	$	122	$	75	$	28

Variable lease costs, short-term lease cost and income related to sub-lease activity is immaterial for the Company.

Supplemental balance sheet, lease term and discount rate information related to operating leases is as follows:


		December 31,
(Millions, unless noted)	Location on face of Balance Sheet	2025			2024
Operating leases:
Operating lease right of use assets	Other assets	$	214		$	176

Current operating lease liabilities	Other current liabilities	70			87
Noncurrent operating lease liabilities	Other liabilities	142			86
Total operating lease liabilities		$	212		$	173

Weighted average remaining lease term (in years):		5.4			2.9
Weighted average discount rate:		5.7		%	4.2		%

Supplemental cash flow information related to operating lease is as follows:


	Year ended December 31,
(Millions)	2025		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:	$	115	$	76	$	29




Right of use assets obtained in exchange for operating lease liabilities:	152		148		37

There was no sale-leaseback activity for the periods presented.

Maturities of operating leases as of December 31, 2025 are as follows:


(Millions)
2026	$	72
2027	49
2028	31
2029	19
2030	14
After 2030	44
Total expected lease payments	229
Less: Amounts representing interest	(17)
Present value of future minimum lease payments	$	212

NOTE 14. Restructuring

Transform for the Future

In November 2025, the Company approved its new multiyear 'Transform for the Future' global initiative (the "Program") to further enable its long-term growth strategy and ensure it's best positioned to compete-to-win in a rapidly changing healthcare environment. Designed to transform the cost structure, enhance operational efficiency, and reposition for profitable growth, the primary activities of the Program include operating structure optimization and workforce reorganization, procurement and cost management, supply chain, manufacturing and global footprint optimization, and streamlining systems and increased automation to improve operational efficiency. Once fully implemented, the four year Program is expected to generate approximately $500 million in annual cost savings, a portion of which will be reinvested in strategic growth initiatives. The Company anticipates cumulative pretax costs related to the Program will be approximately $500 million.

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


	Year ended December 31,
(Millions)	2025
Cost of product	$	1
Cost of software and rentals	—
Selling, general and administrative expenses	44
Research and development expenses	7
Total operating income impact	$	53

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


(Millions)	Employee Termination Benefits		Other Restructuring-related		Total
Expense incurred in 2025	$	42	$	11	$	53
Non-cash changes	(4)		—		(4)
Cash payments	(4)		(7)		(11)
Accrued liabilities as of December 31, 2025	$	34	$	5	$	39

Other includes charges associated with salaries and wages of employees fully dedicated to the Program and consulting service fees. All Program charges were recognized within Corporate and are not included within business segment results.

Solventum Way

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. The actions under the Solventum Way restructuring program were substantially complete as of December 31, 2025.

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


	Year ended December 31
(Millions)	2025		2024
Cost of product	$	8	$	17
Cost of software and rentals	—		2
Selling, general and administrative expenses	14		36
Research and development expenses	5		7
Total operating income impact	$	27	$	62

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


(Millions)	Employee Termination Benefits		Other Restructuring-related		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	$	28	$	(1)	$	27
Non-cash changes	—		(4)		(4)

Cash payments	(65)		(2)		(67)
Accrued liabilities as of December 31, 2025	$	8	$	1	$	9

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.

NOTE 15. Earnings Per Share

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. For the year ended 2023, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

The dilutive effect of outstanding stock options, restricted stock units ("RSUs") and performance share units ("PSUs") is reflected in the calculation of earnings per share using the treasury stock method. Diluted earnings per share excludes certain shares issuable under stock-based compensation plans because the effect would have been antidilutive.

The computations for basic and diluted earnings per share are as follows:


	Year ended December 31,
(Millions, except per share amounts)	2025		2024		2023
Numerator:
Net income	$	1,556	$	479	$	1,346

Denominator:
Weighted average common shares outstanding – basic	174.1		173.2		172.7
Dilution associated with stock-based compensation plans	1.2		0.5		—
Weighted average common shares outstanding – diluted	175.3		173.7		172.7

Basic earnings per share	$	8.94	$	2.77	$	7.79
Diluted earnings per share	$	8.88	$	2.76	$	7.79

Antidilutive shares	3.3		4.0		—

NOTE 16. Stock-Based Compensation

Prior to the Spin-Off, certain eligible employees were awarded incentive stock options, non-qualified stock options, stock appreciation rights, RSUs, and PSUs 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 Solventum 2024 Plan is based on Solventum's common stock. The maximum shares that can be issued under the Solventum 2024 Plan is 18.4 million shares, which represents the sum of 13.0 million shares plus 5.4 million shares related to awards granted under the 3M Company Plan for Solventum employees as described below. As of December 31, 2025, the remaining shares available for future grants under the Solventum 2024 Plan was approximately 8.0 million 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. The stock award modification at Spin-Off resulted in incremental compensation cost of $22 million, of which $20 million was recognized during the year ended December 31, 2024, and $2 million was recognized during the year ended December 31, 2025.

Solventum grants annual stock-based compensation awards to certain employees and non-employee directors. In 2025, the annual grant occurred in March and included grants of RSUs and PSUs. The Company makes other minor grants of RSUs during the year. In 2024, the annual grant occurred in May after the Spin-Off and included grants of RSUs and PSUs. Additionally, in 2024, the Company awarded one-time founders' RSUs and inducement PSUs to certain employees and non-employee directors.

Compensation expense related to stock-based awards is recorded over the requisite service period of the awards. The Company estimates forfeitures based on experience and adjusts expense to reflect actual forfeitures. RSU awards granted as part of the annual grant contain a retirement provision whereby employees who have reached age 55 and completed ten years of service with the Company continue to vest in their award after they retire. Expense for the RSU awards granted to retirement eligible recipients is immediately recognized on the grant date as the award contains a non-substantive vesting condition. Annual PSU awards contain a similar retirement provision, but include a one-year service condition to fully vest in the award. Expense for PSU awards to retirement eligible recipients is recognized over the one-year service period.

Stock-Based Compensation Expense

Amounts recognized in the 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 within Cost of sales. Capitalized stock-based compensation amounts were not material.


	Year ended December 31,
(Millions)	2025		2024		2023
Cost of sales	$	12	$	14	$	8
Selling, general and administrative expenses	133		82		23
Research and development expenses	16		16		8
Stock-based compensation expenses	161		112		39
Income tax benefits (expense)	(22)		(18)		(9)
Stock-based compensation expenses, net of tax	$	139	$	94	$	30

Restricted Stock Units

RSUs contain service-only vesting conditions. The fair value of RSUs is based upon Solventum's closing stock price on the grant date, and the awards generally vest over periods ranging from one to three years from the grant date assuming continued employment. The following table summarizes the RSU activity:



(Units in thousands)	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2024	3,337	$	67.89
Granted	1,488	75.13
Vested	(1,014)	73.80
Forfeited	(286)	68.96
Non-vested as of December 31, 2025	3,525	$	69.15

As of December 31, 2025, there was $92 million of compensation expense that has yet to be recognized related to non-vested RSUs. This expense is expected to be recognized over the remaining weighted-average service period of 22 months.

The following table summarizes additional information relative to RSUs for the respective years. There were no Solventum equity-based awards prior to the Spin-Off:


(Millions, except per-share amounts)	2025		2024		2023
Weighted average grant date fair value of RSUs granted (per unit)	$	75.13	$	62.77	$	—
Total fair value of RSUs vested	75		9		—
Tax benefit realized related to RSUs vested	$	1	$	—	$	—

Performance Share Units

The Company grants PSUs to members of its executive management team. PSUs vest upon completion of the requisite service period of three years, or one year for employees who meet the retirement criteria, and upon the achievement of certain performance metrics or market conditions. Performance metrics relate to Company performance against financial targets related to constant currency revenue and adjusted earnings per share. The market condition relates to Solventum's total shareholder return relative to a selected industry peer group. Performance is measured over three years, and the number of shares of common stock that will vest at the end of the performance period is between 0% to 200% of the target number of PSUs granted based upon actual performance. The fair value of the performance vesting conditions is based upon Solventum's closing stock price on the grant date. The fair value of the market vesting condition is estimated using a Monte Carlo simulation.

In 2024, the Talent Committee of the Board of Directors approved PSU awards for members of the executive management team; however, the cumulative three-year performance metrics for these awards were not established. The Company began accruing the compensation cost related to these awards on the service inception date. In 2025, the grant-date fair value of these awards was determined upon the approval of the cumulative three-year performance metrics. The 2025 annual PSUs were also granted in 2025. The following table summarizes the PSU activity; the granted number of shares represents the shares that will vest based upon attainment of the performance and market conditions at target (i.e. 100%):



(Units in thousands)	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested as of December 31, 2024	—	$	—
Granted	1,121	80.46
Vested	—	—
Forfeited	(51)	80.79
Non-vested as of December 31, 2025	1,070	$	80.45

As of December 31, 2025, there was $53 million of compensation expense that has yet to be recognized related to PSUs. This expense is expected to be recognized over the remaining weighted-average service period of 19 months.

Stock Options

The following table summarizes stock option activity:



(Options in thousands)	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (months)	Aggregate Intrinsic Value (millions)
Outstanding as of December 31, 2024	3,991	$	106.63
Granted	—	—
Exercised	(17)	73.44
Forfeited	(7)	74.74
Expired	(422)	106.37
Outstanding as of December 31, 2025	3,545	106.88		47	$	1
Exercisable as of December 31, 2025	3,465	107.66		46	1
Expected to vest	80	$	73.44	85	$	—

Stock options outstanding and exercisable in the table above relate to the awards previously granted under 3M Company. The outstanding stock options vest over a period of three years from the grant date and expire ten years from the grant date. As of December 31, 2025, there was $0.1 million of compensation expense that has yet to be recognized related to non-vested stock options. This expense is expected to be recognized over the remaining weighted-average service period of 1 month.

NOTE 17. Related Parties

Related Party Transactions Prior to Spin-Off

Prior to the Spin-Off, the Company participated in centralized 3M treasury programs. 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 consolidated balance sheets and have instead been reported within Net parent investment as a component of equity*.*

Corporate Allocations

The 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.

Management believes that the expense allocations were determined on a basis that was a reasonable reflection of the utilization of services provided for or the benefit received by the Company during each of the periods presented prior to April 1, 2024. The amounts that would have been incurred on a standalone basis could materially differ from the amounts allocated. Management does not believe, however, that it is practicable to estimate what these expenses would have been had the Company operated as an independent entity, including any expenses associated with obtaining any of these services from unaffiliated entities. There was no expense allocation activity from 3M after April 1, 2024.

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


	Year ended December 31,
(Millions)		2025		2024		2023
Costs of product		$	—	$	15	$	89
Costs of software and rentals		—		—		—
Selling, general and administrative expenses		—		177		678
Research and development expenses		—		28		86
Total		$	—	$	220	$	853

Related Party Transactions After Spin-Off

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

In connection with the Spin-Off on April 1, 2024, the Company entered into or adopted several agreements that provide a framework for Solventum's relationship with 3M after the separation and distribution. 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 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 years ended December 31, 2025 and 2024 were $534 million and $369 million, respectively, 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 consolidated statements of income.
Master Supply Agreements - The Company recognized revenue and cost of sales associated with products sold to 3M of $78 million and $58 million, respectively, for the year ended December 31, 2025 and $50 million and $37 million, respectively, for the year ended December 31, 2024. Cost of product related to purchases from 3M under the master supply agreements was $241 million and $128 million for the years ended December 31, 2025 and 2024, respectively.

Related Party Transactions

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 consolidated financial statements:


	Year ended December 31,
(Millions)	2025		2024		2023
Net sales of product	$	78	$	50	$	—
Cost of product	616		357		—
Selling, general and administrative expenses	249		202		—
Research and development expenses	11		8		—

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 consolidated financial statements. Non-current amounts due to 3M in connection with the transition distribution services agreement were approximately $0 and $170 million at December 31, 2025 and 2024 and were recognized in other liabilities in the consolidated balance sheets.

Net Parent Investment

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


	Year ended December 31,
(Millions)	2025		2024		2023
Net transfers from (to) 3M on the consolidated changes in equity	$	(33)	$	(8,571)	$	(1,582)
Stock compensation expense	—		(4)		(39)
Multiemployer pension expense	—		(5)		(32)
Net balances transferred from 3M	—		329		100
Net transfers from (to) 3M on the consolidated statements of cash flows	$	(33)	$	(8,251)	$	(1,553)

NOTE 18. Business Segments

Operating segments include components of an enterprise where separate financial information is available that is evaluated regularly by the Company’s Chief Operating Decision Maker ("CODM") for the purpose of assessing performance and allocating resources. 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 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 reportable segments as the CODM does not receive discrete asset information by segment. Beginning in third quarter 2025, as a result of the sale of the Purification and Filtration business, the Company’s operating activities are managed primarily through the following reportable segments: MedSurg, Dental Solutions, and Health Information Systems. There have been no changes to the composition of or to financial information reported within each of these reportable segments. These segments have been identified based on the nature of the products sold and how the Company manages its operations. Transactions among reportable segments are recorded at cost. No operating segments have been aggregated to form reportable segments.

All Other includes the Water Business, which was previously reported within the Purification and Filtration business segment. The Water Business results have been reclassified for comparability within All Other for all historical periods. All Other also includes sales and cost of sales related to our supply agreements with 3M and other supply agreements assumed by the Company at Spin-Off related to legacy 3M businesses, which were historically included in Corporate and Unallocated.

Certain items are maintained at the corporate level and not allocated to the segments ("Corporate and Unallocated"). Corporate and Unallocated primarily includes amortization of acquired intangible assets, restructuring and related charges, timing related benefits or costs associated with capitalized manufacturing variances, charges and recoveries related to certain litigation, transaction and employee retention costs related to the acquisition of Acera, and gains on sale of businesses. In addition, Corporate and Unallocated includes 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 setup operations as a standalone company, including system implementations, manufacturing relocations, legal entity separations, 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 income and costs related to transition service agreements entered into in connection with the sale of the Purification and Filtration business.

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 on a consolidated basis as well as by all segments for all reporting periods.

Business Segments

We are organized into three reportable business segments that are aligned with the markets we serve.

MedSurg Provider of a broad range of innovative, advanced wound care and surgical solutions that are intended to accelerate healing, prevent complications and lower the total cost of care globally.

Dental Solutions Provider of a comprehensive suite of dental and orthodontic products that span the life of the tooth, which are intended to address clinical needs in prevention, restoration, replacement, and malocclusion correction.

Health Information Systems Provider of software solutions and services that are designed to create more time for clinicians to care for patients, improve accuracy in healthcare reimbursement, and support the shift to value-based care.

Business Segment Information and Disaggregated Net Sales


	Year ended December 31,
Net Sales (Millions)	2025		2024		2023
Advanced Wound Care	$	1,883	$	1,835	$	1,826
Infection Prevention and Surgical Solutions	2,934		2,802		2,805
MedSurg	4,817		4,637		4,632
Dental Solutions	1,349		1,295		1,329
Health Information Systems	1,360		1,306		1,285
Total reportable segment net sales	7,526		7,238		7,246
Purification and Filtration	497		709		689
All Other	302		306		262
Total net sales	$	8,325	$	8,254	$	8,197

	Year ended December 31,
Cost of Sales (Millions)	2025		2024		2023
MedSurg	$	2,408	$	2,151	$	2,087
Dental Solutions	475		425		455
Health Information Systems	341		361		358

	Year ended December 31,
Operating Expenses (Millions)*	2025		2024		2023
MedSurg	$	1,598	$	1,600	$	1,438
Dental Solutions	528		519		432
Health Information Systems	523		513		504
* Operating expenses are comprised of selling, general and administrative expenses and research and development expenses as shown on the consolidated statements of income.
	Year ended December 31,
Operating Performance (Millions)	2025		2024		2023
MedSurg	$	810	$	887	$	1,107
Dental Solutions	346		350		442
Health Information Systems	496		431		423
Total reportable segment operating income	1,652		1,668		1,972
Purification and Filtration	96		74		111
All Other	42		30		51
Amortization expense	(312)		(349)		(365)
Corporate and Unallocated	702		(387)		(77)
Total operating income	2,181		1,036		1,692

Interest expense, net	347		367		—
Loss on extinguishment of debt, net	82		—		—
Other expense/(income), net	39		64		25
Income before income taxes	$	1,713	$	605	$	1,667

The following table represents the depreciation amounts reported within the business segment operating income for our reportable segments. The amounts reflected below include both depreciation on property, plant and equipment and equipment held for use. These amounts are included within Cost of Sales and Operating Expenses disclosed in the segment table above.


	Year ended December 31,

(Millions)	2025		2024		2023
MedSurg	$	131	$	123	$	128
Dental Solutions	23		28		23
Health Information Systems	3		5		4

Geographic Information:

Sales are generally reported within the geographic area that originated the invoice to the Company's customer.


	Year ended December 31,
Net Sales (Millions)	2025		2024		2023
United States	$	4,668	$	4,559	$	4,471
International	3,657		3,695		3,726
Worldwide	$	8,325	$	8,254	$	8,197

Long-lived assets include property, plant, and equipment, equipment rented to customers, as well as operating lease right-of-use assets. The following table presents long-lived assets based on the physical location of those assets.


	December 31,
Long Lived Assets (Millions)	2025		2024
United States	$	933	$	1,046
Germany	309		457
Other Countries	366		356
Worldwide	$	1,608	$	1,859

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