Solventum Corp

Item 1, Business Segments, provides an overview of Solventum's business segments. In addition, disclosures relating to Solventum’s segments are provided in Note 12 to the unaudited condensed combined financial statements. 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

In addition to the four business segments, the Company assigns certain costs to “Corporate and Unallocated,” which is presented separately in Note 12 to the unaudited condensed combined financial statements. Corporate and Unallocated includes amortization of acquired intangible assets, restructuring related charges, benefits or costs related to capitalized manufacturing variances and other net costs that the Company chose not to allocate directly to its business segments. Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated net operating loss decreased in the first three months of 2024 when compared to the first three months of 2023 as the Company had fewer costs that were not allocable or otherwise assignable to the operating segments.

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.

Refer to the section entitled "Business" in Solventum's Information Statement for discussion of products that are included in each business segment.

MedSurg (55.5 percent of combined sales for the three months ended March 31, 2024)

First quarter 2024 results

Sales in MedSurg were down 0.4 percent:

•Positive price growth was driven by the impact from actions initiated during the prior year in response to higher material and labor input costs. The favorable impact of prior year price actions is expected to decline as we progress in 2024.

•Volume growth declined, led by advanced wound dressings and sterilization assurance product categories.

•Foreign currency translation negatively impacted sales by (0.5%).

Business segment operating income margin decreased when compared to the same period last year. The decrease was driven by higher planned investments associated with building our standalone operating structure in advance of the Spin-Off.

Dental Solutions (16.6 percent of combined sales for the three months ended March 31, 2024)

Sales in Dental Solutions were down 1.8 percent.

•Positive price growth was driven by the impact from actions initiated during the prior year in response to higher material and labor input costs. The favorable impact of prior year price actions is expected to decline as we progress in 2024.

•Volume decline was primarily driven by traditional orthodontics.

•Prior year divestiture of the dental local anesthetics business negatively impacted sales by (1.8%).

•Foreign currency translation negatively impacted sales by (0.4%).

Business segment operating income margin increased slightly when compared to the same period last year as the benefits from both higher price and lower manufacturing inflation were partially offset by planned investments associated with building our standalone operating structure in advance of the Spin-Off.

Health Information Systems (15.7 percent of combined sales for the three months ended March 31, 2024)

Sales in Health Information Systems were up 0.3 percent.

•Positive growth was driven by our 3MTM 360 Encompass TM solution.

•Clinician productivity solutions declined primarily impacted by changing market conditions.

Business segment operating income margin increased when compared to the same period last year driven by a product mix benefit due to higher software sales and lower professional services.

Purification and Filtration (12.2 percent of combined sales for the three months ended March 31, 2024)

Sales in Purification and Filtration were up 6.1 percent:

•Primarily driven by higher volume growth in both our bioprocessing filtration and membrane OEM product categories. Bioprocessing filtration benefited from the timing of customer orders in the first quarter of 2024. This growth was partially offset by a decline in our separation filtration products.

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

Business segment operating income margin increased slightly as incremental gross profit driven by higher sales was partially offset by higher planned operating cost associated with building our standalone operating structure in advance of the Spin-Off.