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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s consolidated financial statements and corresponding notes elsewhere in this Annual Report on Form 10-K. The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Solventum for the years ended December 31, 2024 and 2023. This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors.” See “Cautionary Note Regarding Forward-Looking Statements.”

All amounts discussed are in millions of U.S. dollars, unless otherwise indicated. Certain columns and rows within tables may not add up due to the use of rounded numbers.

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Unless the context otherwise requires, references to “Solventum” and the “Company” refer to (i) 3M’s Health Care Business prior to the Spin-Off as a carve-out business of 3M and (ii) Solventum Corporation and its subsidiaries following the Spin-Off.

Transition to Standalone Company

Solventum utilized allocations and carve-out methodologies through the date of the Spin-Off to prepare combined financial statements. The consolidated financial statements herein for periods prior to the Spin-Off may not be indicative of the Company’s future performance, do not necessarily include the actual expenses that would have been incurred, and may not reflect our results of operations, financial position, and cash flows had we been a separate, standalone company during the historical periods presented.

In particular, Solventum benefited from 3M’s long operating history, reputation and well-known brand. Following the separation, Solventum is operating under its own brand, and accordingly may be negatively impacted due to the loss of benefits conferred by 3M’s brand recognition and reputation. In addition, the debt obligations incurred by Solventum in connection with the separation will adversely affect its profitability and could affect its ability to use its cash flow for investing in the business, strategic transactions, including mergers and acquisitions, and returning capital. See Note 1, “Significant Accounting Policies - Organization and Description of Business and Basis of Presentation” to the consolidated financial statements and Part 1, Item 1A “Risk Factors” for additional information.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of Solventum’s financial statements with a narrative from the perspective of management. Solventum’s MD&A is presented in the following sections:

•Overview

•Results of Operations

•Performance by Business Segment

•Geographic Area Supplemental Information

•Critical Accounting Estimates

•New Accounting Pronouncements

•Financial Condition and Liquidity

•Financial Instruments

Overview

Solventum is a leading global healthcare company developing, manufacturing, and commercializing a broad portfolio of solutions that leverages deep material science, data science, and digital capabilities to address critical customer and patient needs. We constantly seek to enable the improvement of standards of care and move healthcare forward with innovation powered by insights, clinical intelligence, technology, and manufacturing expertise. Our 70+ year history of discovering and innovating advanced solutions has helped us solve our customers’ toughest challenges and become a trusted partner.

Operating Segments and Sales Change Information

Solventum manages its operations in four business segments: MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.

References are made to organic sales change, which is defined as the change in net sales, absent the separate impacts on sales from foreign currency translation and acquisitions, net of divestitures. Other, as comprised in the tables below, includes acquisition and divestiture-related activities. Acquisitions include non-health care related supply agreements that conveyed from 3M to the Company at Spin-Off and sales from new supply agreements with 3M that commenced at Spin-Off. Divestiture impacts include lost sales from the Company’s dental anesthetics business that was sold in August 2023 as well as lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off. Solventum believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.

Sales and operating income by business segment:

The following tables contain sales and operating results by business segment for all periods presented. The Company’s use of the term “NM” reflects results considered not material due to not having material activity in comparable prior years. Refer to the section entitled “—Performance by Business Segment” below for discussion of sales change and operating performance. Refer to Note 17 to the consolidated financial statements for additional information on business segments.

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Segment and Total Company Net Sales

Year ended December 31,

(Dollars in millions) 2024 2023 Total Currency Impact Other Organic

Segment Sales

Corporate and Unallocated 59 — NM NM NM NM

Year ended December 31,

(Dollars in millions) 2023 2022 Total Currency Impact Other Organic

Segment Sales

Corporate and Unallocated — — — — — —

Segment and Total Company Operating Income

Year ended December 31,

Segment Operating Income

Purification and Filtration 94 162 (42.0)

Year ended December 31,

Segment Operating Income

Purification and Filtration 162 177 (8.5)

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Net Sales by Geographic Area

While the Company manages its businesses globally and believes its business segment results are the most relevant measure of performance, the Company also utilizes geographic area data as a secondary performance measure. Sales are generally reported within the geographic area that originated the invoice to the Company's customer. Additional geographic financial information related to the Company’s operations is provided in Note 17 in the accompanying consolidated financial statements.

Percent change information compares year ended December 31, 2024 and December 31, 2023 with the same periods for the prior year, unless otherwise indicated.

United States International Worldwide

Increase/(decrease)

Currency Impact — (1.2) (0.5)

United States International Worldwide

Increase/(decrease)

Currency Impact — (1.0) (0.4)

Additional information beyond what is included in the preceding table is as follows:

Year ended 2024 results

•In the United States geographic area, both total sales and organic sales increased. Organic growth was led by MedSurg and Health Information Systems.

•In the International geographic area, total sales decreased while organic sales increased. Organic growth was led by Purification and Filtration.

Year ended 2023 results

•In the United States geographic area, all business segments saw organic sales growth year on year, led by Health Information Systems and MedSurg.

•In the International geographic area, total sales growth and organic sales growth decreased. Organic growth decline in Purification and Filtration was partially offset by organic growth in MedSurg and Dental Solutions.

Managing currency risks

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. Starting in the second quarter of 2024, Solventum established its own hedging program. Refer to Note 10 to the consolidated financial statements for additional details.

The stronger U.S. dollar had a negative worldwide impact on sales for the year ended December 31, 2024 compared to 2023. Solventum estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $23 million in 2024.

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Financial condition

Refer to the section entitled “—Financial Condition and Liquidity” below for a discussion of items impacting cash flows.

Results of Operations

Net Sales

Refer to the preceding “—Overview” section and the “—Performance by Business Segment” section later in MD&A for discussion of sales change.

Costs of Sales

Year ended Year ended December 31,

Costs of Product

Costs of product includes manufacturing, engineering and freight costs.

Costs of product, measured as a percent of sales of product, increased in 2024 when compared to 2023. The increase was driven by increased costs due to the impact of higher costs on inventory sourced under the master supply and transition manufacturing agreements with 3M and due to the cost of other transition support provided by 3M.

Costs of product, measured as a percent of sales of product, increased in 2023 when compared to 2022. Material and labor inflation, partially offset by benefits from both price and logistics costs, drove an increase of 0.7%. The material and labor inflation was primarily driven by a 1.4% impact from a higher cost of inventory produced in 2022 but sold in 2023.

Costs of Software and Rentals

Costs of software and rentals includes compensation-related costs associated with installation, training and maintenance for our software products, and depreciation, maintenance and refurbishment costs and freight costs related to our hardware rental units.

Costs of software and rentals, measured as a percent of sales of software and rentals, increased in 2024 as compared to 2023. This increase was driven by higher compensation costs.

Costs of software and rentals, measured as a percent of sales of software and rentals, decreased in 2023 as compared to 2022 due to product mix from higher software sales.

Operating Expenses

Year ended December 31,

Selling, general and administrative (SG&A) 33.7 % 27.4 % 27.5 % 6.3 % (0.1) %

Research and development (R&D) 9.4 9.2 9.4 0.2 (0.2)

Selling, General and Administrative

SG&A, measured as a percent of total net sales, increased in 2024 when compared to 2023. The increase was driven by higher compensation, including equity-based awards, and higher costs associated with both initial stand-up and ongoing operations to support a standalone company.

SG&A, measured as a percent of total net sales, decreased slightly in 2023 when compared to 2022. This decrease was driven by the impact of the gain related to the sale of the Company’s dental local anesthetic business of 0.7%, partially offset by higher expense due to restructuring charges of 0.5%.

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Research and Development

R&D, measured as a percent of total net sales, increased slightly in 2024 when compared to 2023 due to initial stand-up costs. The Company continues to prioritize investment initiatives.

R&D, measured as a percent of total net sales, decreased slightly in 2023 when compared to 2022 as the Company prioritized investment initiatives.

Interest Expense, Net and Other Expense (Income), Net

Year ended December 31,

Interest expense, net $ 367 $ — $ —

Other expense (income), net $ 64 $ 25 $ 1

Interest expense, net includes interest accrued on debt obligations, offset by interest income from cash and marketable securities. Interest expense, net increased in 2024 as compared to 2023 due to interest incurred on the February 2024 issuance of senior notes and March 2024 draw on the senior term loan credit facilities. Refer to Note 8 to the consolidated financial statements for more information. This increase was partially offset by interest earned from cash and marketable securities held during the period. There was no material activity in the years ended December 31, 2023 or 2022.

Other expense (income), net includes the non-service component of periodic pension cost, investment gains and losses, and currency-related impacts from foreign currency translation. Other expense (income), net increased in 2024 as compared to 2023 resulting from charges associated with the substantial liquidation of foreign operations completed as part of our separation from 3M in addition to foreign currency impacts and investment losses.

Other expense (income), net increased in 2023 as compared to 2022 due to investment losses and higher foreign currency transaction losses.

Provision (benefit) for Income Taxes:

Year ended December 31,

Refer to Note 7 to the consolidated financial statements for further discussion of income taxes.

Performance by Business Segment

Note 17 to the consolidated financial statements provides an overview of Solventum’s business segments in addition to disclosures relating to Solventum’s segments. We manage our operations in four business segments. The reportable segments are MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration. Our Chief Operating Decision Maker evaluates segment operating performance using net sales and business segment operating income.

Corporate and Unallocated

Certain items are maintained at the corporate level and not allocated to the segments ("Corporate and Unallocated"). Prior to Spin-Off, Corporate and Unallocated primarily included amortization of acquired intangible assets, restructuring and related charges, and benefits or costs related to capitalized manufacturing variances. Corporate and Unallocated also 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 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. Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

Operating Business Segments

Information related to the Company’s segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.

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MedSurg (56.2% of consolidated sales for the year ended December 31, 2024 )

Year ended December 31,

Increase/(decrease)

Other (0.5) — —

Currency Impact (0.6) (0.6) (3.7)

Business segment operating income (millions) $ 887 $ 1,107 $ 1,061

Year 2024 results:

Sales in MedSurg were up 0.1%:

•Organic sales growth of 1.2% was driven by volumes, primarily due to benefits from medical OEM products, I.V. site management, and single-use negative pressure wound therapy, partially offset by declines in traditional negative pressure wound therapy and sterilization assurance products.

•Other includes lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.

•Foreign currency translation negatively impacted sales by (0.6%).

Business segment operating income margin decreased when compared to the same period last year. The decrease was driven by higher costs to stand-up and operate our standalone structure after Spin-Off.

Year 2023 results:

Sales in MedSurg were up 1.0%:

•Organic sales growth of 1.6% was driven by price partially offset by lower volume. Volume declines from our microfluidics and hand hygiene product lines, which benefited from higher sales during the pandemic, negatively impacted growth by 1.1%.

Business segment operating income margin increased when compared to the same period last year. The increase was driven by spending control and price partially offset by material inflation.

Dental Solutions (15.7% of consolidated sales for the year ended December 31, 2024)

Year ended December 31,

Increase/(decrease)

Currency Impact (0.7) (0.4) (4.8)

Business segment operating income (millions) $ 350 $ 442 $ 437

Percent change (20.8) % 1.1 % (9.3) %

Year 2024 results:

Sales in Dental Solutions were down (2.6%):

•Volume declines associated with softening end-market demand were partially offset by the favorable impact of prior year price actions.

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•Other is primarily driven by lost sales from the Company’s dental anesthetics business that was sold in August 2023 as well as lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.

•Foreign currency translation negatively impacted sales by (0.7%).

Business segment operating income margin decreased when compared to the same period last year as a result of higher costs to stand-up and operate our standalone structure after Spin-Off.

Year 2023 results:

Sales in Dental Solutions were up 0.2%:

•Positive volume and price growth of 3.5% from dental products were partially offset by declines in traditional orthodontic products.

•Other was negatively impacted by 1.1% due to the exit of Health Care operations in Russia.

Business segment operating income margin increased slightly when compared to the same period last year as price increases offset the cost of material inflation.

Health Information Systems (15.8% of consolidated sales for year ended December 31, 2024)

Year ended December 31,

Increase/(decrease)

Other — — —

Currency Impact — — (0.8)

Business segment operating income (millions) $ 431 $ 423 $ 359

Year 2024 results:

Sales in Health Information Systems were up 1.6%:

•Positive sales growth was driven by continued adoption of our 3MTM 360 EncompassTM.

•Clinician productivity solutions declined primarily due to impacts from changing market conditions.

Business segment operating income margin increased slightly when compared to the same period last year as product mix benefit due to higher software sales and lower professional services was partially offset by higher compensation costs.

Year 2023 results:

Sales in Health Information Systems were up 4.7%:

•Sales growth was broadly driven across the portfolio, including revenue cycle management, performance management and clinician productivity solutions. Growth was driven by both new customers and product upgrades at existing customers.

•Sales growth was negatively impacted by delays to customers’ investments in IT, which were driven by ongoing stress on hospital budgets.

Business segment operating income margin increased when compared to the same period last year driven by both price increases and lower spending, partially offset by wage inflation. Volume growth into higher margin products drove mix benefit.

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Purification and Filtration (11.6% of consolidated sales for the year ended December 31, 2024)

Year ended December 31,

Increase/(decrease)

Other (0.9) — —

Currency Impact (0.7) (0.4) (6.3)

Business segment operating income (millions) $ 94 $ 162 $ 177

Year 2024 results:

Sales in Purification and Filtration were up 0.6%:

•Primarily driven by higher volume growth in our bioprocessing filtration product category. This growth was partially offset by our membranes OEM and drinking water filtration product categories.

•Other includes lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.

•Foreign currency translation negatively impacted sales by (0.7%).

Business segment operating income margin decreased primarily due to the negative impact from costs to stand-up and operate our standalone structure after Spin-Off.

Year 2023 results:

Sales in Purification and Filtration were down 4.0%.

•Sales growth was primarily impacted by inventory rebalancing at our bioprocessing filtration customers, which reduced sales by 5.4%. This decline was partially offset by growth in our separation products.

Business segment operating income margin decreased primarily due to the negative impact of product mix from lower bioprocessing filtration sales.

Geographic Area Supplemental Information

Employment:

Employment decreased slightly in 2024 when compared to 2023 and increased in 2023 when compared to 2022. The above table includes the impact of acquisitions and other actions.

Capital Spending and Property, Plant and Equipment - Net:

Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency. The Company is increasing its investment in manufacturing and sourcing capability in order to more closely align its production capability with its sales in major geographic areas in order to best serve its customers

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throughout the world with proprietary, automated, efficient, safe and sustainable processes. Capital spending is discussed in more detail below in the section entitled “—Cash Flows from Investing Activities.”

Critical Accounting Estimates

Information regarding significant accounting policies is included in Note 1 of the accompanying consolidated financial statements. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates.

The Company considers the items below to be critical accounting estimates. Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company.

Legal Proceedings

Assessments of lawsuits and claims can involve a series of complex judgments about future events, the outcomes of which are inherently uncertain, and can rely heavily on estimates and assumptions. The Company accrues an estimated liability for legal proceeding claims that are both probable and reasonably estimable in accordance with Accounting Standard Codification (ASC) 450, Contingencies. Please refer to the section entitled “Process for Disclosure and Recording of Liabilities Related to Legal Proceedings” (contained in “Legal Proceedings” in Note 11 to the accompanying consolidated financial statements) for additional information about such estimates.

Goodwill

The Company makes certain estimates and judgments in impairment assessments of goodwill. Goodwill is tested for impairment annually in the fourth quarter of each year, as further discussed below, and is tested between annual tests 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. The Company's reporting units correspond to a business segment as this represents the lowest level of discrete financial information below sales that is available and is regularly reviewed by segment management. An impairment loss would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. 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. The Company also performs a discounted cash flow analysis for certain reporting units where the market approach indicates additional review is warranted. A discounted cash flow analysis involves key assumptions including projected sales, EBITDA margins, capital expenditures, and discount rates. Changes in reporting unit earnings, comparable company information, and expected future cash flows, as well as underlying market and overall economic conditions, among other factors, make these estimates subject to uncertainty. The Company did not perform a discounted cash flow analysis for any reporting unit for any period presented, as the market approach analysis resulted in sufficient headroom between the fair value and the carrying value for each of the Company's reporting units.

As of December 31, 2024, goodwill totaled approximately $6.4 billion. The Company has four reporting units, with the MedSurg reporting unit accounting for approximately 56 percent of the goodwill. Based on the annual tests in the fourth quarter of 2024, 2023, and 2022, no goodwill impairment was indicated for any of the Company's reporting units. Further, there were no events or changes in circumstances during the year ended December 31, 2024 that would indicate the carrying amount of a reporting unit may be impaired. The Company will continue to monitor its reporting units for any triggering events or other indicators of impairment.

New Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 1 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Financial Condition and Liquidity

The strength and stability of Solventum’s operating model and strong free cash flow capability provides financial flexibility and enables the Company to invest through business cycles. Historically, Solventum generated positive operating cash flows and a majority of such cash flows were transferred to 3M as part of 3M’s cash pooling arrangements, the effect of which is presented as Net transfers to 3M in our consolidated financial statements.

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Upon completion of the Spin-Off, Solventum has ceased participation in 3M's cash pooling arrangement and our cash and cash equivalents are held and used solely for our own operations. As a result, the Company's capital structure, long-term commitments and sources of liquidity have changed significantly.

Debt and Credit Facilities

On February 16, 2024, the Company entered into a five-year $2.0 billion unsecured revolving credit facility expiring in 2029, an 18-month senior unsecured term loan facility of $500 million and a three-year senior unsecured term loan facility of $1.0 billion (collectively, the “Facilities”). In March 2024, the Company withdrew $1.48 billion under the Facilities. The funds from the Facilities were transferred to 3M as partial consideration for the Spin-Off.

On February 27, 2024, Solventum issued $6.9 billion of Senior Notes in preparation for the payment of partial consideration to 3M in connection with the Spin-Off.

In August 2024, the Company prepaid $200 million of the outstanding principal amount from the 18-month senior unsecured term loan credit facility. In December 2024, the Company prepaid an additional $100 million of the outstanding principal amount from the same facility.

The Company also had approximately $40 million in bank guarantees, surety bonds, and other similar instruments issued and outstanding at December 31, 2024. These instruments are utilized in connection with normal business activities.

Refer to Note 8 of the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.

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, 2024.

Cash, cash equivalents and marketable securities

As of December 31, 2024, Solventum had $762 million of cash and cash equivalents, of which approximately $611 million was held by the Company’s foreign subsidiaries and approximately $151 million was held in the United States. These balances are invested in bank instruments and other high-quality fixed income securities. As of December 31, 2023, Solventum had $194 million of cash and cash equivalents, of which approximately $150 million was held by the Company’s foreign subsidiaries and $44 million was held in the United States. There were immaterial amounts of marketable securities at both December 31, 2024 and December 31, 2023. The increase from December 31, 2023 resulted from both cash retained by the Company at Spin-Off and operating cash flow generated by the Company subsequent to the Spin-Off.

Cash Flows

Cash flows from operating, investing and financing activities are provided in the tables that follow. Individual amounts in the consolidated statements of cash flows exclude the effect of exchange rate impacts on cash and cash equivalents, which are presented separately in the cash flows. Thus, the amounts presented in the following operating, investing and financing activities tables reflect changes in balances from period to period adjusted for these effects.

Cash Flows from Operating Activities:

Year ended December 31,

Cash Flows from Operating Activities

Adjustments to reconcile net income to net cash provided by operating activities

Postretirement benefit plan expense 34 41 64

Stock-based compensation expense 112 39 37

Gain on business divestitures — (56) —

Changes in assets and liabilities

Due from related parties 233 — —

Due to related parties (565) — —

Net cash provided by operating activities $ 1,185 $ 1,915 1,679

In 2024, cash flows provided by operating activities decreased compared to 2023 primarily due to lower net income. Cash flow activity with 3M is reflected in the due from and due to related parties. This activity includes settlement of payables and receivables transferred at Spin-Off related to operating transactions between 3M and Solventum entities that occurred prior to the Spin-Off and transactions under the transition agreements with 3M.

In 2023, cash flows provided by operating activities increased compared to 2022 primarily due to decreases in inventories, increases in accounts payable, and higher year over year accrued compensation, partially offset by increases in accounts receivables. The lower cash outflows from inventory was driven by supply chain stabilization.

Cash Flows from Investing Activities:

Year ended December 31,

Cash Flows from Investing Activities

Purchases of property, plant and equipment $ (380) $ (290) (251)

Proceeds from sale of business — 60 —

Other — net — — (2)

Net cash used in investing activities $ (380) $ (230) (253)

Purchases of property, plant and equipment increased in 2024 as compared to 2023. The increase is primarily driven by additional separation related capital spending as the Company relocates manufacturing and source of supply from 3M. In addition, the Company is focused on investments to support growth, renewal and maintenance programs, and environmental health services.

Overall property, plant and equipment spending increased in 2023 as compared to 2022 as the Company continues to invest in growth, productivity and sustainability. Proceeds from sale of businesses include the sale of assets associated with the Company’s dental local anesthetic business.

Cash Flows from Financing Activities:

Year ended December 31,

Cash Flows from Financing Activities

Repayment of debt $ (300) $ — —

Proceeds from long-term debt, net of issuance costs 8,303 —

Other — net 8 1 (4)

Net cash provided by (used in) financing activities $ (240) $ (1,552) (1,460)

Proceeds from long-term debt of $8.3 billion were related to the first quarter issuance of $6.9 billion in senior notes and $1.5 billion in senior term loan credit facilities. The proceeds from these financing transactions were transferred to 3M in connection with the Spin-Off transaction, other than the amounts retained in order to achieve the $600 million retained cash target. The Company repaid $300 million outstanding principle issued under the senior term loan credit facilities.

Financing cash outflows increased in 2023 due to higher net transfers to 3M.

Material Cash Requirements from Known Contractual and Other Obligations:

Solventum’s material cash requirements from known contractual and other obligations primarily relate to the following, for which information on both a short-term and long-term basis is provided in the indicated notes to the consolidated financial statements:

•Tax obligations—Refer to Note 7 to the consolidated financial statements.

•Debt—Refer to Note 8 to the consolidated financial statements.

•Commitments and contingencies—Refer to Note 11 to the consolidated financial statements.

•Operating leases—Refer to Note 12 to the consolidated financial statements.

Solventum purchases the majority of its materials and services as needed, with no unconditional commitments. In limited circumstances, in the normal course of business, the Company enters into unconditional purchase obligations with various vendors that may take the form of, for example, take or pay contracts in which the Company guarantees payment to ensure availability of certain materials or services or to ensure ongoing efforts on capital projects. The Company expects to receive underlying materials or services for these purchase obligations. To the extent the limited amount of these purchase obligations fluctuates, it largely trends with normal-course changes in regular operating activities. Additionally, contractual capital commitments represent a small part of the Company’s expected capital spending.

Financial Instruments

The Company enters into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances. As circumstances warrant, the Company also uses cross currency swapsas hedging instruments to hedge portions of the Company’s net investments in foreign operations. To help manage borrowing costs, the Company may enter into interest rate swaps, interest rate locks or other hedging instruments.

Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” for further discussion of foreign exchange rates risk, and interest rates risk and commodity prices risk.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the context of Item 7A, Solventum is exposed to market risk due to the risk of loss arising from adverse changes in foreign currency exchange rates, interest rates and commodity prices. Changes in those factors could impact the Company’s results of operations and financial condition. The Company manages commodity price risks through negotiated supply contracts and price protection agreements. Senior management provides oversight for risk management and derivative activities, determines certain of the Company’s financial risk policies and objectives, and provides guidelines for derivative instrument utilization. Senior management also establishes certain associated procedures relative to control and valuation, risk analysis, counterparty credit approval, and ongoing monitoring and reporting.

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To quantify Solventum’s primary market risk exposure, the Company performs a sensitivity analysis based on hypothetical changes in foreign currency spot exchange rates and interest rates as further described in the sections below. Note also that hypothetical changes in these rates were not applied to cash equivalents, accounts receivable, and accounts payable, because of the short-term nature of these instruments.

Refer to Note 1. Significant Accounting Policies, Note 8. Long-Term Debt and Short-Term Borrowings and Note 10. Derivatives within the notes to the consolidated financial statements of this Annual Report on Form 10-K for additional discussion of foreign currency exchange, interest rates and financial instruments.

Foreign Currency Exchange Rates Risk: Foreign currency exchange rates and fluctuations in those rates may affect the Company’s net investment in foreign subsidiaries and may cause fluctuations in cash flows related to foreign denominated transactions. As circumstances warrant, the Company also uses cross-currency swap contracts as instruments to hedge portions of the Company’s net investments in foreign operations.Solventum is also exposed to the translation of foreign currency earnings to the U.S. dollar. 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. Solventum may de-designate these cash flow hedge relationships in advance of the occurrence of the forecasted transaction. In addition, Solventum enters into foreign currency contracts that are not designated in hedging relationships to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances. At December 31, 2024, an instantaneous 10% change in applicable foreign currency spot exchange rates would have increased/decreased the aggregate fair value carrying amount of foreign exchange forward and by approximately $45 million.

Interest Rates Risk: The Company may be impacted by interest rate volatility with respect to existing debt and future debt issuances. Solventum manages interest rate risk and expense using a mix of fixed and floating rate debt. In addition, the Company may enter into interest rate swaps that are designated and qualify as fair value hedges. At December 31, 2024, an instantaneous 100 basis point change in applicable interest rates would increase/decrease the Company's pre-tax earnings by approximately $10 million on an annualized basis as it relates to the Company’s floating-rate notes and interest rate swap agreements.

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.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Solventum Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Solventum Corporation and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidatedstatements 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, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements 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 of these consolidated financial statements 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.

Our audits 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. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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 $6,348 million and $1,906 million, respectively, for the year ended December 31, 2024.

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, among others (i) testing revenue recognized for a

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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, 2024 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.

/s/ PricewaterhouseCoopers LLP

Minneapolis, Minnesota

February 28, 2025

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

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Solventum Corporation

Consolidated Statements of Income

Year ended December 31,

Selling, general and administrative expenses 2,782 2,243 2,235

Interest expense, net 367 — —

Other expense (income), net 64 25 1

Earnings per share:

Weighted-average number of shares outstanding:

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

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Solventum Corporation

Consolidated Statements of Comprehensive Income

Year ended December 31,

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment (203) 157 (331)

Defined benefit pension (5) (33) 34

Cash flow hedging instruments 20 — —

Total other comprehensive income (loss), net of tax (188) 124 (297)

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

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Solventum Corporation

Consolidated Balance Sheets

December 31,

(Millions, except share information) 2024 2023

Assets

Current assets

Cash and cash equivalents $ 762 $ 194

Accounts receivable — net of allowances of $86 and $82 1,044 1,313

Due from related parties 185 —

Inventories

Raw materials and supplies 236 233

Property, plant and equipment — net 1,622 1,457

Liabilities

Current liabilities

Short-term borrowings and current portion of long-term debt $ 200 $ —

Due to related parties 272 —

Long-term debt 7,810 —

Pension and postretirement benefits 350 166

Commitments and contingencies (Note 11)

Equity

Common stock, par value $0.01 per share, 750,000,000 shares authorized $ 2 $ —

Shares issued and outstanding - December 31, 2023: 0

Additional paid-in-capital 3,771 —

Retained earnings 242 —

Net parent investment — 12,003

Accumulated other comprehensive income (loss) (1,056) (337)

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

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — (331) (331)

Defined benefit pension — — — — — 34 34

Total other comprehensive income (loss), net of tax — — — — — (297) (297)

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — 157 157

Defined benefit pension — — — — — (33) (33)

Total other comprehensive income (loss), net of tax — — — — — 124 124

Other comprehensive income (loss), net of tax

Cumulative translation adjustment — — — — — (203) (203)

Defined benefit pension — — — — — (5) (5)

Cash flow hedging — — — — — 20 20

Total other comprehensive income (loss), net of tax — — — — — (188) (188)

Stock-based compensation — — 108 — — — 108

Common stock for tax withholding obligations — — (4) — — — (4)

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

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Solventum Corporation

Consolidated Statements of Cash Flows

Year ended December 31,

Cash Flows from Operating Activities

Adjustments to reconcile net income to net cash provided by operating activities

Pension and postretirement benefit expense 34 41 64

Stock-based compensation expense 112 39 37

Gain on business divestitures — (56) —

Changes in assets and liabilities

Due from related parties 233 — —

Due to related parties (565) — —

Cash Flows from Investing Activities

Purchases of property, plant and equipment (380) (290) (251)

Proceeds from sale of business — 60 —

Other — net — — (2)

Net cash used in investing activities (380) (230) (253)

Cash Flows from Financing Activities

Repayment of debt (300) — —

Proceeds from long-term debt, net of issuance costs 8,303 — —

Other — net 8 1 (4)

Net cash used in financing activities (240) (1,552) (1,460)

Effect of exchange rate changes on cash and cash equivalents 3 — 4

Net increase (decrease) in cash and cash equivalents 568 133 (30)

Cash and cash equivalents at beginning of year 194 61 91

Cash and cash equivalents at end of year $ 762 $ 194 $ 61

Supplemental Cash Flow Information

Cash paid for:

Income taxes $ 244 $ — $ —

Interest 287 — —

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

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Solventum Corporation

Notes to the Consolidated Financial Statements

NOTE 1. Significant Accounting Policies

Organization and Description of Business

Solventum Corporation (“Solventum” or the “Company”) was a carve-out business of 3M Company (“3M”). On April 1, 2024 (the “Distribution Date”), 3M completed the previously announced spin-off of Solventum Corporation (the “Spin-Off”). 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 four operating business segments that are aligned with the end markets that the Company serves: MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.

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, 2024, 2023, and 2022, and financial position as of December 31, 2024 and 2023.

Effective April 1, 2024, the Company’s financial statements are presented on a consolidated basis, as the Spin-Off was completed on such date. 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. 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 16 “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. In periods prior to Spin-Off, the cash and cash equivalents reflected in the Company's consolidated balance sheet primarily represents cash managed by the Health Care Business as part of 3M's centralized cash program.

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.

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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 $25 million, $32 million, and $28 million for the years ended December 31, 2024, 2023, and 2022, 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.

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 is tested for impairment between annual tests 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 reporting units correspond to a business 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 other technology-based, 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 eleven to nineteen years, patents and other technology-based between six 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 3 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 (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 conterminous 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

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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 statement 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.

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 periods 2022, 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

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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 will file tax returns on its own behalf, and its income tax provision is prepared on a standalone basis. As a result, its deferred taxes and effective tax rate for 2024 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.

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% 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. 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

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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.

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

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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, $540 million, and $540 million of the December 31, 2023, 2022, and 2021 balance, respectively, was recognized as revenue during the years ended December 31, 2024, 2023, and 2022, respectively.

Operating Lease Revenue

Sales of software and rental includes rental revenue from durable medical equipment as part of operating lease arrangements, which was $600 million, $616 million, and $603 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Customer Concentration

No customer accounted for more than 10% of the Company’s revenues for the years ended December 31, 2024, 2023, or 2022. Additionally, no customers accounted for more than 10% of accounts receivable as of December 31, 2024 and one customer accounted for approximately 10% of accounts receivable at December 31, 2023.

NOTE 3. Goodwill and Intangible Assets

Goodwill

The goodwill balance by business segment is as follows:

Divestiture — (4) — — (4)

The Company completed its annual goodwill impairment test in the fourth quarter of 2024 for all reporting units and determined that no impairment existed.

There was no goodwill recorded from acquisitions during the years ended December 31, 2024 and 2023.

In August 2023, 3M completed the sale of assets associated with its dental local anesthetic business (part of the Dental Solutions segment) to Pierrel S.p.A for approximately $60 million in cash. This transaction resulted in a net pre-tax gain of $56 million. In connection with this transaction, goodwill was reduced by approximately $4 million.

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

December 31, December 31,

Customer related intangible assets $ 2,720 $ 2,734

Patents and other technology-based intangible assets 1,895 1,897

Tradenames and other amortizable intangible assets 729 705

Accumulated amortization — customer related (1,208) (1,081)

Accumulated amortization — patents and other technology-based (1,224) (1,055)

Accumulated amortization — tradenames and other (368) (323)

Total accumulated amortization (2,800) (2,459)

Total finite-lived intangible assets — net 2,544 2,877

Indefinite lived intangible assets — 25

Total intangible assets — net $ 2,544 $ 2,902

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In June 2024, the Company made the decision to start phasing out the use of a tradename within its Dental Solutions business. This tradename, which was categorized as indefinite-lived as of December 31, 2023, has been reclassified to finite-lived and is being amortized over the expected phase-out period.

Amortization expense was as follows:

Year ended December 31,

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

NOTE 4. Other Current Liabilities

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

December 31, December 31,

Other current liabilities

Accrued compensation $ 281 $ 209

Accrued interest 114 —

Total other current liabilities $ 1,041 $ 677

NOTE 5. Property, Plant, and Equipment - Net

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

December 31, December 31,

Property, plant and equipment - at cost

Buildings and leasehold improvements $ 956 $ 937

Construction in progress 504 320

Gross property, plant and equipment 3,610 3,338

Property, plant and equipment - net $ 1,622 $ 1,457

Depreciation expense consisted of the following:

Year ended December 31,

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NOTE 6. Comprehensive Income Information

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:

Other comprehensive income (loss), before tax:

Amounts before reclassifications (331) 45 — (286)

Amounts reclassified out — 2 — 2

Total other comprehensive income (loss), before tax (331) 47 — (284)

Tax effect — (13) — (13)

Total other comprehensive income (loss), net of tax (331) 34 — (297)

Transfers from 3M, net of tax — — — —

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

Total other comprehensive income (loss), net of tax 157 (33) — 124

Transfers from 3M, net of tax — 36 — 36

Other comprehensive income (loss), before tax:

Amounts before reclassifications (239) (44) 24 (259)

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)

Additional details on the amounts reclassified from AOCI into consolidated income include:

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

•Defined benefit pension plans: amounts were reclassified into other expense (income), net (see Note 9).

•Cash flow hedging: foreign currency forward contracts amounts were reclassified into cost of sales (see Note 10).

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

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NOTE 7. Income Taxes

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

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

Currently payable

Deferred

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

Deferred tax assets:

Miscellaneous accruals $ 42 $ 52

Net operating/capital loss carryforward 55 95

Disallowed interest carryforwards 14 —

Foreign tax credits 35 52

Advanced royalties — 26

Research and experimentation capitalization 129 213

Lease liabilities 32 16

Other deferred tax assets 20 37

Gross deferred tax assets 486 593

Valuation allowance (33) (56)

Total deferred tax assets 453 537

Deferred tax liabilities:

Property, plant, and equipment (78) (108)

Right-of-use assets (33) (16)

Total deferred tax liabilities (389) (448)

Net deferred tax asset (liability) $ 64 $ 89

As displayed in the table above, as of December 31, 2024, the Company has provided $33 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, 2024, the Company had tax-effected operating loss and capital loss carryforwards of $55 million and tax credit carryforwards of $37 million for federal, state, and international jurisdictions, with all amounts before limitation impacts and valuation allowances. Federal and state tax attributes will expire after one to eighteen years and international tax attributes after one to an indefinite carryover period.

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

U.S. Statutory income tax rate 21.0 % 21.0 % 21.0 %

State income taxes - net of federal benefit 1.8 1.7 2.1

International income taxes - net (7.0) (1.3) (1.7)

Global Intangible Low Taxed Income (GILTI) 4.2 0.8 0.7

Foreign Derived Intangible Income (FDII) (3.3) (2.2) (2.5)

U.S. research and development credit (4.1) (1.2) (1.8)

Reserves for tax contingencies (1.4) (4.1) 0.6

Tax impact of legal entity restructuring 4.7 2.3 —

Changes in valuation allowance 2.6 1.4 0.7

Deferred rate change 0.9 0.1 (0.3)

Effective income tax rate 20.9 % 19.3 % 20.6 %

The effective income tax rate for 2024 was 20.9%, compared to 19.3% in 2023, an increase of 1.6 percentage points. The primary factors that increased the tax rate were the tax impact of legal entity restructuring in connection with the Spin-Off, partially offset by the recognition of a previously unrecognized tax benefit due to the expiration of the statute of limitations.

In 2021, the Organisation for Economic Co-operation and Development (“OECD”) announced Pillar Two Model Rules which call for the taxation of large multinational corporations at a global minimum tax rate of 15%. Many non-U.S. tax jurisdictions, including Ireland, have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in fiscal year 2024 or announced their plans to enact legislation in future years. In 2024, the Company incurred insignificant tax impact in connection with Pillar Two.

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 $36 million and $40 million have been recorded to “Other liabilities” as of December 31, 2024 and 2023, 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:

Additions based on tax positions related to the current year 4 22 18

Additions for tax positions of prior years — 17 17

Additions related to recent acquisitions — — —

Reductions for tax positions of prior years (64) (35) (19)

Settlements — — —

Reductions due to lapse of applicable statute of limitations (8) (74) (10)

Reductions for amounts recorded to net parent investment — (32) (7)

The total amount of UTB, if recognized, would affect the effective tax rate by $141 million as of December 31, 2024. It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months. 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. At this time, the Company is not able to estimate the range by which these potential events could impact the Company’s unrecognized tax benefits within the next 12 months.

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

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jurisdictions. As of December 31, 2024, 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 $1.0 million of benefit, $7.5 million of benefit and $3.9 million of expense in 2024, 2023 and 2022, 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, 2024 and 2023, accrued interest and penalties in the consolidated balance sheets on a gross basis were $5.3 million and $4.5 million, respectively.

As of December 31, 2024, 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 $2 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 8. Long-Term Debt and Short-Term Borrowings

Carrying value includes the impact of debt issuance costs. There were no long-term debt or short-term borrowings as of December 31, 2023. Long-term debt and short-term borrowings as of December 31, 2024 consisted of the following:

Eighteen month senior term loan credit facility USD Floating 6.13 % 2025 $ 200

Three year senior term loan credit facility USD Floating 6.13 2027 979

$1 billion 5.45 percent three year senior notes USD Fixed 5.40 2027 995