Solventum Corp

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.

Operating Expenses

Cost of Product

Cost of product includes manufacturing, engineering and freight costs.

Cost of product, measured as a percent of sales of product, increased in the first quarter of 2025 when compared to the first quarter of 2024. 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.

Cost of Software and Rentals

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

Cost of software and rentals, measured as a percent of sales of software and rentals, decreased slightly during the first quarter of 2025 as compared to the same period last year due to the impact of higher software revenue.

Selling, General and Administrative

SG&A, measured as a percent of total net sales, increased in the first quarter of 2025 when compared to the same period last year. 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.

Research and Development

R&D, measured as a percent of total net sales, decreased in the first quarter of 2025 when compared to the same period last year due to similar costs year-on-year in relation to higher net sales.

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

Interest expense, net includes interest accrued on debt obligations, offset by interest income from cash and marketable securities. Interest expense, net increased in the first quarter of 2025 as compared to the same period last year due to a full quarter of interest incurred related to the February 2024 issuance of senior notes and March 2024 draw on the senior term loan credit facilities. Refer to Note 9 to the financial statements for more information. This increase was partially offset by interest earned from cash and marketable securities held during the period.

Other expense (income), net includes the non-service component of periodic pension cost, investment gains and losses, and foreign currency transaction gain (loss). Other expense (income), net decreased slightly for the first quarter of 2025 as compared to the same period last year as lower currency-related impacts were offset by higher non-service pension costs from plans that transferred at the end of March 2024.

Provision for (benefit from) Income Taxes:

Refer to Note 8 to the financial statements for further discussion of income taxes.