During the three and six months ended October 28, 2022 and October 29, 2021, 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 and six months ended October 28, 2022 and October 29, 2021. 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 and six months ended October 28, 2022, 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 and six months ended October 28, 2022.

On August 30, 2022, the Company acquired Affera, Inc. (Affera) a privately-held company focused on the development 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, net of cash acquired for the transaction, was $904 million. Based upon a preliminary acquisition valuation, the Company acquired $660 million of goodwill and $300 million of in-process research and development. The goodwill is not deductible for tax purposes. The Company recognized $201 million of contingent consideration liabilities in connection with the acquisition, which are comprised of product development milestone-based payments.

Revenue and net loss attributable to Affera 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 October 28, 2022.


(in millions)	Intersect ENT		Affera
Cash and cash equivalents	$	39	$	66
Inventory	32		—
Goodwill	615		660
Other intangible assets	683		300
Other assets	40		1
Total assets acquired	1,408		1,027

Current liabilities	63		2
Deferred tax liabilities	51		53
Other liabilities	18		1
Total liabilities assumed	131		56
Net assets acquired	$	1,277	$	970

For acquisitions other than Intersect ENT and Affera, the acquisition date fair value of net assets acquired during the six months ended October 28, 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 six months ended October 28, 2022, which are comprised of revenue and product development milestone-based payments.

The acquisition date fair value of net assets acquired during the six months ended October 29, 2021 was $125 million, consisting of $154 million of assets acquired and $29 million of liabilities assumed. Assets acquired were primarily comprised of $80 million of goodwill and $50 million of technology-based intangible assets with estimated useful lives ranging from 15 years to 16 years. The goodwill is not deductible for tax purposes. The Company recognized $31 million of contingent consideration liabilities in connection with business combinations during the six months ended October 29, 2021, which are comprised of revenue and product development milestone-based payments.

IPR&D with no alternative future use acquired outside of a business combination is expensed immediately. The Company did not acquire any IPR&D in connection with asset acquisitions of technology not yet approved during the three months ended October 28, 2022 and October 29, 2021. During the six months ended October 28, 2022, IPR&D acquired in connection with asset acquisitions of technology not yet approved by regulators was not significant. During the six months ended October 29, 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 (income) expense, net in the consolidated statements of income.

The fair value of contingent consideration at October 28, 2022 and April 29, 2022 was $349 million and $119 million, respectively. At October 28, 2022, $149 million was recorded in other accrued expenses, and $200 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				Six months ended
(in millions)	October 28, 2022		October 29, 2021		October 28, 2022		October 29, 2021
Beginning balance	$	193	$	294	$	119	$	270
Purchase price contingent consideration	201		31		274		31
Purchase price allocation adjustments	—		—		—		25
Payments	—		(30)		(1)		(41)
Change in fair value	(45)		(26)		(43)		(16)
Ending balance	$	349	$	269	$	349	$	269


	Fair Value at
(in millions)	October 28, 2022	Unobservable Input	Range	Weighted Average (1)
Revenue and other performance-based payments	$95	Discount rate	11.2% - 27.2%	17.1%
		Projected fiscal year of payment	2023 - 2027	2025
Product development and other milestone-based payments	$254	Discount rate	3.9% - 5.5%	4.3%
		Projected fiscal year of payment	2023 - 2027	2025

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 and as of that date, the RCS business met the criteria to be classified as held for sale. 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 non-cash pre-tax charges of $14 million and $81 million, primarily related to impairment of goodwill and changes in the carrying amount of the disposal group, in the three and six months ended October 28, 2022, respectively, recognized in other operating (income) 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)	October 28, 2022
Inventories, net	$	111
Property, plant, and equipment, net	143
Goodwill	145
Other intangible assets, net	114
Other	32
Total assets held for sale (1)	$	545

Total liabilities held for sale (1)(2)	$	30

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.