Segment Reporting

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE J – SEGMENT REPORTING

We have three reportable segments comprised of MedSurg, Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices. We measure and evaluate our reportable segments based on net sales of reportable segments, operating income of reportable segments, excluding intersegment profits, and operating income of reportable segments as a percentage of net sales of reportable segments. Operating income of reportable segments as a percentage of net sales of reportable segments is defined as operating income of reportable segments divided by net sales of reportable segments. We exclude from operating income of reportable segments certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker (CODM) considers to be non-operational, such as amounts related to amortization expense, intangible asset impairment charges, acquisition/divestitures-related net charges/(credits), restructuring and restructuring-related net charges/(credits), EU Medical device regulation (MDR) implementation costs and litigation-related charges/(credits). Although we exclude these amounts from operating income of reportable segments, they are included in reported Income (loss) before income taxes on the unaudited condensed consolidated statements of operations and are included in the reconciliation below.

Our seven core businesses are organized into three reportable segments: MedSurg, Rhythm and Neuro, and Cardiovascular. Following our acquisition of BTG, which closed during the third quarter of 2019, we have included BTG’s Interventional Medicine business within our Peripheral Interventions operating segment, within the Cardiovascular reportable segment. We present BTG’s Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments.

A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows (in millions, except percentages):

	Three Months Ended March 31,
Net sales	2020			2019
MedSurg	$	774		$	766
Rhythm and Neuro	703			757
Cardiovascular	1,026			972
Total net sales of reportable segments	2,502			2,493
All other (Specialty Pharmaceuticals)	41			n/a
Consolidated net sales	$	2,543		$	2,493
	Three Months Ended March 31,
Income (loss) before income taxes	2020			2019
MedSurg	$	259		$	256
Rhythm and Neuro	99			155
Cardiovascular	199			275
Total operating income of reportable segments	556			686
All other (Specialty Pharmaceuticals)	26			n/a
Unallocated amounts:
Corporate expenses, including hedging activities	(33		)	(48		)
Intangible asset impairment charges, acquisition/divestiture-related net (charges) credits, restructuring- and restructuring-related net (charges) credits, EU MDR implementation costs and litigation-related net (charges) credits	(202		)	63
Amortization expense	(201		)	(160		)
Operating income (loss)	146			541
Other expense, net	(124		)	(84		)
Income (loss) before income taxes	$	22		$	457
Operating income of reportable segments as a percentage of net sales of reportable segments	Three Months Ended March 31,
	2020			2019
MedSurg	33.4		%	33.4		%
Rhythm and Neuro	14.1		%	20.5		%
Cardiovascular	19.4		%	28.3		%