During the three months ended July 29, 2022, the Company had acquisitions that were accounted for as business combinations. The assets and liabilities of the businesses acquired were recorded and consolidated on the acquisition date at their respective fair values. Goodwill resulting from business combinations is largely attributable to future, yet to be defined technologies, new customer relationships, existing workforce of the acquired businesses, and synergies expected to arise after the Company's acquisition of these businesses. The pro forma impact of these acquisitions was not significant, either individually or in the aggregate, to the consolidated results of the Company for the three months ended July 29, 2022. The results of operations of acquired businesses have been included in the Company's consolidated statements of income since the date each business was acquired. For the three months ended July 29, 2022 and July 30, 2021, purchase price allocation adjustments were not significant.

On May 13, 2022, the Company acquired Intersect ENT, a global ear, nose, and throat (ENT) medical technology leader. The acquisition expands the Neuroscience segment portfolio of products used during ENT procedures, and combined with the Company's navigation, powered instruments, and existing tissue health products, will offer a broader suite of solutions to assist surgeons treating patients who suffer from chronic rhinosinusitis (CRS). Total consideration, net of cash acquired, for the transaction, in which the Company acquired all outstanding shares of Intersect ENT for $28.25 per share, was $1.2 billion consisting of $1.1 billion of cash and $98 million previously held investments in Intersect ENT. Based upon a preliminary acquisition valuation, the Company acquired $615 million of goodwill, $635 million of technology-based intangible assets, $35 million of customer-related intangible assets, and $13 million of tradenames with estimated useful lives of 20 years. The goodwill is not deductible for tax purposes.

Revenue and net loss attributable to Intersect ENT since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for the three months ended July 29, 2022.


(in millions)	Intersect ENT
Cash and cash equivalents	$	39
Inventory	32
Goodwill	615
Other intangible assets	683
Other assets	40
Total assets acquired	1,408

Current liabilities	63
Deferred tax liabilities	51
Other liabilities	18
Total liabilities assumed	131
Net assets acquired	$	1,277

For acquisitions other than Intersect ENT, the acquisition date fair value of net assets acquired during the three months ended July 29, 2022 was $123 million. Based upon preliminary valuations, assets acquired were primarily comprised of $66 million of goodwill and $57 million of technology-based intangible assets with estimated useful lives of 16 years. The goodwill is deductible for tax purposes. The Company recognized $73 million of contingent consideration liabilities in connection with these acquisitions during the three months ended July 29, 2022, which are comprised of revenue and regulatory milestone-based payments.

Subsequent to July 29, 2022, on August 30, 2022 the Company acquired Affera, Inc. (Affera) a privately-held manufacturer of cardiac mapping and navigation systems and catheter-based cardiac ablation technologies. The acquisition expands the Cardiovascular segment portfolio of advanced cardiac ablation products and accessories to include its first cardiac mapping and navigation platform to meet physician needs within a growing patient population. Total consideration for the transaction is up to $1.0 billion, including up to $250 million of undiscounted contingent consideration related to certain technical and regulatory milestones. The transaction will be accounted for as a business combination using the acquisition method of accounting. This requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

Due to the limited amount of time since the acquisition date and the significant limitations on access to Affera information prior to the acquisition date, the preliminary acquisition valuation for the business combination is incomplete at this time. As a result, the Company is unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed, including the information required for valuation of intangible assets and goodwill. We will include such disclosures in our Form 10-Q for the quarter ending October 28, 2022.

IPR&D with no alternative future use acquired outside of a business combination is expensed immediately. During the three months ended July 29, 2022, IPR&D acquired in connection with asset acquisitions of technology not yet approved by regulators was not significant. During the three months ended July 30, 2021, the Company acquired $90 million of IPR&D in connection with asset acquisitions of technology not yet approved by regulators, which was recognized in research and development expense in the consolidated statements of income.

Certain of the Company’s business combinations involve potential payment of future consideration that is contingent upon the achievement of certain product development milestones and/or contingent on the acquired business reaching certain performance milestones. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within other operating expense, net in the consolidated statements of income.

The fair value of contingent consideration at July 29, 2022 and April 29, 2022 was $193 million and $119 million, respectively. At July 29, 2022, $64 million was recorded in other accrued expenses, and $129 million was recorded in other liabilities in the consolidated balance sheet. At April 29, 2022, $35 million was recorded in other accrued expenses, and $84 million was recorded in other liabilities in the consolidated balance sheet.


	Three months ended
(in millions)	July 29, 2022		July 30, 2021
Beginning balance	$	119	$	270
Purchase price contingent consideration	73		—
Purchase price allocation adjustments	—		25
Payments	—		(11)
Change in fair value	2		10
Ending balance	$	193	$	294


	Fair Value at
(in millions)	July 29, 2022	Unobservable Input	Range	Weighted Average (1)
Revenue and other performance-based payments	$143	Discount rate	11.2% - 27.2%	15.0%
		Projected fiscal year of payment	2023 - 2027	2025
Product development and other milestone-based payments	$50	Discount rate	5.5%	5.5%
		Projected fiscal year of payment	2023 - 2024	2023

(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected fiscal year of payment, the amount represents the median of the inputs and is not a weighted average.

On May 25, 2022, the Company and DaVita Inc. (“DaVita”) entered into a definitive agreement for the Company to sell half of its Renal Care Solutions (RCS) business. This sale is part of an agreement between Medtronic and DaVita to form a new, independent kidney care-focused medical device company (“NewCo”) with equal equity ownership. As a result of entering into the definitive agreement, the RCS business met the criteria to be classified as held for sale on the date the agreement was entered into. The transaction is expected to close in calendar year 2023, subject to customary regulatory approvals and closing conditions. RCS is part of the Company’s Medical Surgical portfolio. The Company recorded a non-cash pre-tax impairment of $67 million, primarily related to goodwill, in the three months ending July 29, 2022 recognized in other operating expense, net in the consolidated statements of income. Refer to Note 10 to the consolidated financial statements for additional information on the goodwill impairment.


(in millions)	July 29, 2022
Inventories, net	$	119
Property, plant, and equipment, net	141
Goodwill	147
Other intangible assets, net	114
Other	48
Total assets held for sale (1)	$	568

Total liabilities held for sale (1)(2)	$	38

There were no assets or liabilities classified as held for sale at April 29, 2022. The Company determined that the agreement to sell half of the RCS business does not meet the criteria to be classified as discontinued operations.