Solventum Corp

Note 14 to the audited combined financial statements within the Company's Information Statement dated March 11, 2024, provides an overview of Solventum's business segments. In addition, disclosures relating to Solventum’s segments are provided in Note 15 to 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 15 to the condensed consolidated and combined financial statements. Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, Spin-Off and separation related costs and other net costs that the Company chose not to allocate directly to its business segments. Spin-Off and separation related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone Company, including system implementations, manufacturing relocation, legal entity separation, certain equity awards granted as part of the Spin-Off, profit mark-ups on transition service arrangements with 3M and other one-time costs.

Corporate and Unallocated also includes sales and cost of sales related to product supplied to 3M and other supply agreements related to legacy 3M non-health care business that were assumed by the Company at Spin-Off. 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 increased in both the second quarter and the first six months of 2024 when compared to the same period last year as the Company had higher Spin-Off and separation related costs.

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 (55.8 percent and 55.7 percent of consolidated sales for the three and six months ended June 30, 2024)

Second quarter 2024 results

Sales in MedSurg were up 0.1 percent:

•Organic sales growth was driven by both volume and price, including a benefit from OEM backorder reduction.

•Volume growth benefited from single-use negative pressure wound therapy and I.V. site management solutions.

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

•Foreign currency translation negatively impacted sales by (1.1%).

Business segment operating income margin decreased when compared to the same period last year. The decrease was driven by a mix penalty due to OEM backorder reduction and higher costs to standup and operate our standalone structure after Spin-Off.

First six months 2024 results

Sales in MedSurg were down (0.1) 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.

•Organic growth was led by single-use negative pressure wound therapy, partially offset by declines in sterilization assurance and advanced wound dressings.

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

•Foreign currency translation negatively impacted sales by (0.8%).

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

Dental Solutions (15.9 percent and 16.3 percent of consolidated sales for the three and six months ended June 30, 2024)

Sales in Dental Solutions were down (5.8) percent.

•Volume declines were partially offset by modest price growth. Lower volumes were primarily driven by traditional orthodontics.

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

•Foreign currency translation negatively impacted sales by (1.5%).

Business segment operating income margin decreased when compared to the same period last year as a result of higher costs to standup and operate our standalone structure after Spin-Off, partially offset by the benefit from higher price.

Sales in Dental Solutions were down (3.8) percent.

•Volume declines were partially offset by positive price growth. The favorable impact of prior year price actions decreased during the period and the impact of such price actions are expected to continue to moderate through the remainder of 2024.

•Other is primarily driven by lost sales from the Company's dental anesthetics business that was sold in August 2023.

•Foreign currency translation negatively impacted sales by (0.9%)

Business segment operating income margin decreased when compared to the same period last year as a result of higher costs to standup and operate our standalone structure after Spin-Off, partially offset by the benefits from both higher price and lower manufacturing inflation.

Health Information Systems (15.8 percent and 15.7 percent of consolidated sales for the three and six months ended June 30, 2024)

Sales in Health Information Systems were up 3.5 percent.

•Positive growth was driven by continued adoption of our 3MTM 360 Encompass TM and performance management solutions.

•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 both price and a product mix benefit due to higher software sales and lower professional services.

Sales in Health Information Systems were up 2.0 percent.

•Positive growth was driven by continued adoption of our 3MTM 360 Encompass TM and performance management solutions.

•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 (11.4 percent and 11.8 percent of consolidated sales for the three and six months ended June 30, 2024)

Sales in Purification and Filtration were down (3.6) percent:

•Primarily driven by drinking water filtration end markets, partially offset by higher volume growth in bioprocessing filtration.

•Other includes certain business in India retained by 3M in connection with the Spin-Off.

•Foreign currency translation negatively impacted growth by (1.6%).

Business segment operating income margin decreased due to a negative impact from higher costs in international, sales mix and costs to standup and operate our standalone structure after Spin-Off.

Sales in Purification and Filtration were up 0.9 percent:

•Primarily driven by higher volume growth in both our bioprocessing filtration and membrane OEM product categories. This growth was partially offset by a decline in our separation filtration and drinking water filtration products.

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

•Foreign currency translation negatively impacted growth by (1.1%).

Business segment operating income margin decreased due to the negative impact from higher costs in international, sales mix and costs to standup and operate our standalone structure after Spin-Off.