10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-11083

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	04-2695240
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

    300 Boston Scientific Way, Marlborough, Massachusetts                    01752-1234

        (Address of Principal Executive Offices)                         (Zip Code)

508 683-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BSX	New York Stock Exchange
0.625% Senior Notes due 2027	BSX27	New York Stock Exchange
5.50% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share	BSX PR A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares outstanding of Common Stock, $0.01 par value per share, as of April 30, 2021 was 1,420,910,855.

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION	3
ITEM 1.	Consolidated Financial Statements	3
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4
	Consolidated Balance Sheets (Unaudited as of March 31, 2021)	5
	Consolidated Statements of Stockholders' Equity (Unaudited)	6
	Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to the Consolidated Financial Statements (Unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	53
ITEM 4.	Controls and Procedures	54
PART II	OTHER INFORMATION	55
ITEM 1.	Legal Proceedings	55
ITEM 1A.	Risk Factors	55
ITEM 6.	Exhibits	55
SIGNATURE		56

2

PART I

FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended March 31,
(in millions, except per share data)	2021		2020
Net sales	$	2,752	$	2,543
Cost of products sold	894		806
Gross profit	1,858		1,737
Operating expenses:
Selling, general and administrative expenses	1,019		978
Research and development expenses	276		300
Royalty expense	12		12
Amortization expense	185		201
Intangible asset impairment charges	—		198
Contingent consideration net expense (benefit)	(6)		(108)
Restructuring net charges (credits)	5		10
Litigation-related net charges (credits)	4		—
Gain on disposal of business	(6)		—
	1,488		1,591
Operating income (loss)	370		146
Other income (expense):
Interest expense	(82)		(88)
Other, net	37		(36)
Income (loss) before income taxes	325		22
Income tax (benefit) expense	(16)		12
Net income (loss)	341		11
Preferred stock dividends	(14)		—
Net income (loss) available to common stockholders	$	327	$	11
Net income (loss) per common share — basic	$	0.23	$	0.01
Net income (loss) per common share — assuming dilution	$	0.23	$	0.01
Weighted-average shares outstanding
Basic	1,418.7		1,397.4
Assuming dilution	1,430.8		1,413.5

See notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.

3

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Three Months Ended March 31,
(in millions)	2021		2020
Net income (loss)	$	341	$	11
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(83)		(177)
Net change in derivative financial instruments	129		75
Net change in defined benefit pensions and other items	1		—
Total other comprehensive income (loss)	47		(101)
Total comprehensive income (loss)	$	388	$	(91)

See notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.

4

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of
(in millions, except share and per share data)	March 31, 2021		December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,016	$	1,734
Trade accounts receivable, net	1,631		1,531
Inventories	1,407		1,351
Prepaid income taxes	192		194
Assets held for sale	—		1,133
Other current assets	855		751
Total current assets	6,101		6,694
Property, plant and equipment, net	2,053		2,084
Goodwill	10,868		9,951
Other intangible assets, net	5,991		5,917
Deferred tax assets	4,173		4,210
Other long-term assets	1,714		1,921
TOTAL ASSETS	$	30,900	$	30,777
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt obligations	$	13	$	13
Accounts payable	615		513
Accrued expenses	2,060		2,197
Other current liabilities	705		958
Total current liabilities	3,393		3,681
Long-term debt	9,082		9,130
Deferred income taxes	336		330
Other long-term liabilities	2,370		2,309
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value - authorized 50,000,000 shares - issued 10,062,500 shares as of March 31, 2021 and December 31, 2020	—		—
Common stock, $0.01 par value - authorized 2,000,000,000 shares - issued 1,683,861,226 shares as of March 31, 2021 and 1,679,911,918 shares as of December 31, 2020	17		17
Treasury stock, at cost - 263,289,848 shares as of March 31, 2021 and December 31, 2020	(2,251)		(2,251)
Additional paid-in capital	19,750		19,732
Accumulated deficit	(2,050)		(2,378)
Accumulated other comprehensive income (loss), net of tax	254		207
Total stockholders’ equity	15,719		15,326
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	30,900	$	30,777

See notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.

5

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

	Preferred Stock			Common Stock			Treasury Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss), Net of Tax
(in millions, except share data)	Shares Issued	Par Value		Shares Issued	Par Value
As of December 31, 2019	—	$	—	1,642,488,911	$	16	$	(1,717)	$	17,561	$	(2,253)	$	270
Net income (loss)											11
Cumulative effect adjustment for adoption of ASU 2016-13											(10)
Total other comprehensive income (loss)													(101)
Stock-based compensation				4,388,331					28
As of March 31, 2020	—	$	—	1,646,877,242	$	16	$	(1,717)	$	17,589	$	(2,252)	$	168
Net income (loss)											(147)
Total other comprehensive income (loss)													(37)
Preferred stock issuance	10,062,500	—							975
Common stock issuance				29,382,500	—				975
Preferred stock dividends											(5)
Stock-based compensation				493,824					50
As of June 30, 2020	10,062,500	$	—	1,676,753,566	$	17	$	(1,717)	$	19,590	$	(2,405)	$	131
Net income (loss)											(155)
Total other comprehensive income (loss)													20
Preferred stock dividends											(14)
Stock-based compensation				2,674,643					97
As of September 30, 2020	10,062,500	$	—	1,679,428,209	$	17	$	(1,717)	$	19,687	$	(2,574)	$	151
Net income (loss)											210
Total other comprehensive income (loss)													56
Preferred stock dividends											(14)
Repurchase of common stock							(535)
Stock-based compensation				483,709					45
As of December 31, 2020	10,062,500	$	—	1,679,911,918	$	17	$	(2,251)	$	19,732	$	(2,378)	$	207
Net income (loss)											341
Total other comprehensive income (loss)													47
Preferred stock dividends											(14)
Stock-based compensation				3,949,308					19
As of March 31, 2021	10,062,500	$	—	1,683,861,226	$	17	$	(2,251)	$	19,750	$	(2,050)	$	254

See notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.

6

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
(in millions)	2021		2020
Net income (loss)	$	341	$	11
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities
Gain on disposal of businesses	(6)		—
Depreciation and amortization	268		277
Deferred and prepaid income taxes	(1)		7
Stock-based compensation expense	47		42
Intangible asset impairment charges	—		184
Net loss (gain) on investments and notes receivable	(37)		22
Contingent consideration net expense (benefit)	(6)		(108)
Inventory step-up amortization	8		18
Foreign exchange (gain) loss	2		7
Other, net	22		43
Increase (decrease) in operating assets and liabilities, excluding purchase accounting:
Trade accounts receivable	(117)		161
Inventories	(115)		(199)
Other assets	(128)		(128)
Accounts payable and accrued expenses	(10)		(456)
Other liabilities	16		42
Cash provided by (used for) operating activities	284		(77)
Purchases of property, plant and equipment	(75)		(100)
Proceeds from sale of property, plant and equipment	4		3
Payments for acquisitions of businesses, net of cash acquired	(706)		—
Proceeds from royalty rights	22		23
Payments for investments and acquisitions of certain technologies	(13)		(2)
Proceeds from sale of investments	38		—
Proceeds from disposal of businesses	801		—
Cash provided by (used for) investing activities	71		(76)
Payment of contingent consideration previously established in purchase accounting	(11)		(23)
Payments for royalty rights	(42)		(52)
Payments on short-term borrowings	—		(300)
Proceeds from short-term borrowings, net of debt issuance costs	—		1,000
Net increase (decrease) in commercial paper	—		(714)
Payments on borrowings from credit facilities	—		(479)
Proceeds from borrowings on credit facilities	—		1,839
Payments on long-term borrowings and debt extinguishment costs	—		(1,000)
Cash dividends paid on preferred stock	(14)		—
Cash used to net share settle employee equity awards	(46)		(57)
Proceeds from issuances of common stock pursuant to employee stock compensation and purchase plans	18		42
Cash provided by (used for) financing activities	(95)		256
Effect of foreign exchange rates on cash	(3)		(9)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	258		93
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	1,995		607
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	2,253	$	700

See notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.

7

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(SUPPLEMENTAL INFORMATION)

	Three Months Ended March 31,
(in millions)	2021		2020
Supplemental Information
Stock-based compensation expense	$	47	$	42
Fair value of contingent consideration recorded in purchase accounting	219		—
Non-cash impact of transferred royalty rights	(22)		(23)

	As of March 31,
Reconciliation to amounts in the unaudited consolidated balance sheets:	2021		2020
Cash and cash equivalents	$	2,016	$	370
Restricted cash and restricted cash equivalents included in Other current assets	184		288
Restricted cash equivalents included in Other long-term assets	53		42
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	2,253	$	700

See notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.

8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the first quarter of 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Accordingly, our unaudited consolidated financial statements and footnotes thereto should be read in conjunction with our audited consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

Amounts reported in millions within this quarterly report are computed based on the amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.

Subsequent Events

We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure in our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly. Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note H – Commitments and Contingencies and Note I – Stockholders' Equity for further details.

NOTE B – ACQUISITIONS, DIVESTITURES AND STRATEGIC INVESTMENTS

Our accompanying unaudited consolidated financial statements include the operating results for acquired entities from the respective dates of acquisition. We completed one acquisition and one divestiture in the first quarter of 2021 and did not complete any acquisitions or divestitures during the first quarter of 2020. We have not presented supplemental pro forma financial information for completed acquisitions or divestitures given their results are not material to our accompanying unaudited consolidated financial statements. Transaction costs for all acquisitions and divestitures completed during 2021 and 2020 were immaterial to our accompanying unaudited consolidated financial statements and were expensed as incurred.

On March 3, 2021, we announced our entry into a definitive agreement to acquire the global surgical business of Lumenis LTD. (Lumenis), a privately-held company that develops and commercializes energy-based medical solutions, for an upfront cash payment of approximately $1.070 billion subject to closing adjustments. The global surgical business of Lumenis includes innovative laser systems, fibers, and accessories used for urology and otolaryngology procedures. The acquisition is expected to close during the second half of 2021, subject to customary closing conditions. Following the closing of the acquisition, we plan to integrate the Lumenis business into our Urology and Pelvic Health division.

2021 Acquisition

On March 1, 2021, we completed the acquisition of Preventice Solutions, Inc. (Preventice), a privately-held company which offers a full portfolio of mobile cardiac health solutions and services, ranging from ambulatory cardiac monitors, to cardiac event monitors and mobile cardiac telemetry. The transaction consisted of an upfront cash payment of $925 million and up to an additional $300 million in a potential commercial milestone payment. We have been an investor in Preventice since 2015 and held an equity stake of approximately 22 percent immediately prior to the acquisition date. We remeasured the fair value of our previously-held investment based on the allocation of the purchase price according to priority of equity interests, which resulted in a $195 million gain recognized within Other, net in the first quarter of 2021. The transaction price for the remaining stake consisted of an upfront cash payment of $706 million, net of cash acquired, and up to approximately $230 million in an additional future revenue-based payment. The Preventice business is being managed by our Cardiac Rhythm Management division.

9

Purchase Price Allocation

The preliminary purchase price was comprised of the amounts presented below, which represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations. As of March 31, 2021, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified intangible assets and contingent consideration liability.

(in millions)
Payment for acquisition, net of cash acquired	$	706
Fair value of contingent consideration	219
Fair value of prior interest	269
	$	1,194

The preliminary purchase price allocation was comprised of the following components:

(in millions)
Goodwill	$	924
Amortizable intangible assets	236
Other assets acquired	66
Liabilities assumed	(32)
	$	1,194

We allocated a portion of the preliminary purchase price to the specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	214	9	10%
Other intangible assets	22		8	10%
	$	236

Goodwill was primarily established due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies and is not deductible for tax purposes.

2021 Divestiture

On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business to Stark International Lux S.A.R.L., and SERB SAS, affiliates of SERB, a European specialty pharmaceutical group, for a purchase price of approximately $800 million, subject to certain adjustments including cash on hand at the closing of the transaction. The agreement included the transfer of five facilities and approximately 280 employees globally.

We classified the assets and liabilities of the Specialty Pharmaceuticals business (disposal group) as held for sale within our consolidated balance sheet as of December 31, 2020 at their respective carrying values, which approximated fair value, less costs to sell. Assets within the disposal group are presented within Assets held for sale and liabilities are presented within Other current liabilities within our consolidated balance sheet as of December 31, 2020. Refer to Note C – Assets and Liabilities Held for Sale to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information. In the first quarter of 2021, we recognized a $6 million Gain on disposal of business associated with the transaction within our accompanying unaudited consolidated statements of operations.

10

Contingent Consideration

Changes in the fair value of our contingent consideration liability were as follows:

(in millions)
Balance as of December 31, 2020	$	196
Amount recorded related to current year acquisitions	219
Contingent consideration net expense (benefit)	(6)
Contingent consideration payments	(11)
Balance as of March 31, 2021	$	398

As of March 31, 2021, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay associated with our completed acquisitions was $754 million, which includes amounts related to our acquisition of Preventice. Refer to Note B – Acquisitions and Strategic Investments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of March 31, 2021	Valuation Technique	Unobservable Input	Range				Weighted Average(1)
R&D, Regulatory and Commercialization-based Milestones	$103 million	Discounted Cash Flow	Discount Rate	2%				2%
			Probability of Payment	90%				90%
			Projected Year of Payment	2027				2027
Revenue-based Payments	$296 million	Discounted Cash Flow	Discount Rate	4	%	-	14%	7%
			Probability of Payment	80	%	-	100%	100%
			Projected Year of Payment	2021		-	2024	2022

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

Projected contingent payment amounts related to research and development (R&D), commercialization-based and revenue-based milestones are discounted back to the current period, primarily using a discounted cash flow model. Significant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement as of March 31, 2021.

Strategic Investments

The aggregate carrying amount of our strategic investments was comprised of the following:

	As of
(in millions)	March 31, 2021		December 31, 2020
Equity method investments	$	246	$	319
Measurement alternative investments(1)	182		183
Publicly-held equity securities(2)	213		414
Notes receivable	2		2
	$	643	$	918

(1)    Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations.

(2)    Publicly-held equity securities are measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations.

11

These investments are classified as Other long-term assets within our accompanying unaudited consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies.

In the first quarter of 2021, we recorded a $146 million net loss on our investment in Pulmonx Corporation presented in Other, net associated with the partial disposition of our ownership and remeasurement of our remaining investment to fair value based on observable market prices. In addition, on March 1, 2021, we completed our acquisition of Preventice, in which we previously held an equity interest. As of March 31, 2021, the cost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by $286 million, which represents amortizable intangible assets, in-process research and development (IPR&D), goodwill and deferred tax liabilities.

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of March 31, 2021				As of December 31, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization/ Write-offs(1)		Gross Carrying Amount		Accumulated Amortization/ Write-offs
Technology-related	$	11,279	$	(6,325)	$	11,059	$	(6,179)
Patents	499		(397)		511		(407)
Other intangible assets	1,810		(1,252)		1,775		(1,220)
Amortizable intangible assets	$	13,588	$	(7,975)	$	13,345	$	(7,806)
Goodwill	$	20,768	$	(9,900)	$	19,924	$	(9,973)
IPR&D	$	257			$	257
Technology-related	120				120
Indefinite-lived intangible assets	$	377			$	377

(1)    In the fourth quarter of 2020, we recorded goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business and classified the remaining assets and liabilities as held for sale as of December 31, 2020. On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. The goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business are no longer presented within accumulated write-offs above as of March 31, 2021.

The increase in our balance of goodwill and intangible assets is primarily related to our acquisition of Preventice in the first quarter of 2021.

Our technology-related intangible assets consist of technical processes, intellectual property and institutional understanding with respect to products and processes that we intend to leverage in future products or processes and will carry forward from one product generation to the next. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets and are amortizing them on a straight-line basis over their assigned estimated useful lives. Our IPR&D represents intangible assets that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use. The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region.

The following represents our goodwill balance by global reportable segment:

(in millions)	MedSurg		Rhythm and Neuro		Cardiovascular		Total
As of December 31, 2020	$	2,059	$	2,194	$	5,697	$	9,951
Impact of foreign currency fluctuations and other changes in carrying amount	(3)		(1)		(2)		(6)
Goodwill acquired	—		924		—		924
As of March 31, 2021	$	2,056	$	3,117	$	5,695	$	10,868

12

Prior to the divestiture on March 1, 2021, we presented the Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments.

Goodwill and Indefinite-Lived Intangible Asset Impairment Testing

We did not record any goodwill impairment charges in the first quarter 2021 or 2020. We did not record any Intangible asset impairment charges in the first quarter 2021 and recorded $198 million of Intangible asset impairment charges in the first quarter of 2020.

We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If we determine it is more likely than not that the asset is impaired based on our qualitative assessment of impairment indicators, we test the intangible asset for recoverability. If the carrying value of the intangible asset or asset group exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset or asset group, we will write the carrying value down to fair value in the period impairment is identified.

The impairment charges recorded in the first quarter of 2020 were primarily associated with amortizable technology-related intangible assets that were initially established following our acquisition of nVision. These charges were recorded as a result of management’s decision to change commercial launch plans or discontinue certain R&D programs based on cost to complete, time to market, overall economic viability or, specific to nVision, our understanding of the clinical evidence necessary to commercialize the technology.

We test our indefinite-lived intangible assets at least annually during the third quarter for impairment and reassess their classification as indefinite-lived assets. In addition, we review our indefinite-lived intangible assets for classification and impairment more frequently if impairment indicators exist. We assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that our indefinite-lived intangible assets are impaired. If we conclude that it is more likely than not that the asset is impaired, we then determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other. If the carrying value exceeds the fair value of the indefinite-lived intangible asset, we write the carrying value down to the fair value.

Refer to Note A – Significant Accounting Policies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for further discussion of our annual goodwill and intangible asset impairment testing.

NOTE D – HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through risk management programs which include the use of derivative and nonderivative financial instruments. We operate these programs pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. Our derivative instruments do not subject our earnings to material risk, as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item.

We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

Currency Hedging Instruments

Risk Management Strategy

Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities, forecasted intercompany and third-party transactions, and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative and

13

nonderivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates.

The success of our currency risk management program depends, in part, on forecast transactions denominated primarily in Euro, Japanese yen, Chinese renminbi and Australian dollar. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecast. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Hedge Designations and Relationships

Certain of our currency derivative instruments are designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging (FASB ASC Topic 815), and are intended to protect the U.S. dollar value of forecasted transactions. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in the Net change in derivative financial instruments component of Other comprehensive income (loss), net of tax (OCI) within our accompanying unaudited consolidated statements of comprehensive income (loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, we recognize the gain or loss in earnings within Cost of products sold in our accompanying unaudited consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the gains or losses within Accumulated other comprehensive income (loss), net of tax (AOCI) to earnings at that time.

We also designate certain forward currency contracts as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Swiss franc, Japanese yen, British pound sterling, South Korean won and Taiwan dollar. For these derivative instruments, we elected to use the spot method to assess hedge effectiveness. We also elected to exclude the spot-forward difference, referred to as the excluded component, from the assessment of hedge effectiveness and are amortizing this amount separately, as calculated at the date of designation, on a straight-line basis over the term of the currency forward contracts. As such, we defer recognition of foreign currency gains and losses within the Foreign currency translation adjustment (CTA) component of OCI, and we reclassify amortization of the excluded component from AOCI to current period earnings within Interest expense in our accompanying unaudited consolidated statements of operations.

We designate certain euro-denominated debt as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro. As of March 31, 2021 and December 31, 2020, we designated as a net investment hedge a portion of our €900 million in aggregate principal amount of 0.625% senior notes issued in November 2019 and due in 2027. For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the CTA component of OCI. We reclassify these gains and losses to current period earnings within Other, net in our accompanying unaudited consolidated statements of operations only when the hedged item affects earnings, which would occur upon disposal or substantial liquidation of the underlying foreign subsidiary.

We also use forward currency contracts that are not part of designated hedging relationships under FASB ASC Topic 815 as a part of our strategy to manage our exposure to currency exchange rate risk related to monetary assets and liabilities and related forecast transactions. These non-designated currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year, and are marked-to-market with changes in fair value recorded to earnings within Other, net in our accompanying unaudited consolidated statements of operations.

Interest Rate Hedging Instruments

Risk Management Strategy

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to mitigate the risk to our earnings and cash flows associated with exposure to changes in interest rates. Under these agreements, we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges in accordance with FASB ASC Topic 815.

14

Hedge Designations and Relationships

We had no interest rate derivative instruments designated as cash flow hedges outstanding as of March 31, 2021 and December 31, 2020. Prior to 2020, we terminated interest rate derivative instruments that were designated as cash flow hedges and are continuing to recognize the amortization of the gains or losses originally recorded within AOCI to earnings as a component of Interest expense over the same period that the hedged item affects earnings, provided the hedge relationship remains effective. If we determine the hedge relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the amount of gains or losses from AOCI to earnings at that time.

In the event that we designate outstanding interest rate derivative instruments as cash flow hedges, we record the changes in the fair value of the derivatives within OCI until the underlying hedged transaction occurs. The balance of the deferred amounts on our terminated cash flow hedges within AOCI was a $28 million loss as of March 31, 2021 and a $29 million loss as of December 31, 2020. We recognized immaterial gains and losses in Interest expense relating to the amortization of our terminated cash flow hedges in the current and prior periods.

We had no interest rate derivative instruments designated as fair value hedges outstanding as of March 31, 2021 and December 31, 2020. Prior to 2018, we terminated interest rate derivative instruments that were designated as fair value hedges and are continuing to recognize the amortization of the gains or losses originally recorded within Long-term debt in our accompanying unaudited consolidated balance sheets into earnings as a component of Interest expense over the same period that the discount or premium associated with the hedged items affects earnings. In the event that we designate outstanding interest rate derivative instruments as fair value hedges, we record the changes in the fair values of interest rate derivatives designated as fair value hedges and of the underlying hedged debt instruments in Interest expense, which generally offset. The balance of the deferred gains on our terminated fair value hedges within Long-term debt was immaterial as of March 31, 2021 and December 31, 2020. We recognized immaterial gains in Interest expense relating to the amortization of the terminated fair value hedges in the current and prior periods.

The following table presents the contractual amounts of our hedging instruments outstanding:

(in millions)	FASB ASC Topic 815 Designation	As of
		March 31, 2021		December 31, 2020
Forward currency contracts	Cash flow hedge	$	4,741	$	4,531
Forward currency contracts	Net investment hedge	1,004		1,004
Foreign currency-denominated debt(1)	Net investment hedge	927		868
Forward currency contracts	Non-designated	5,296		4,946
Total Notional Outstanding		$	11,969	$	11,349

(1)    Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge.

The remaining time to maturity as of March 31, 2021 is within 60 months for all forward currency contracts designated as cash flow hedges and generally less than one year for all non-designated forward currency contracts. The forward currency contracts designated as net investment hedges generally mature within the next two years. The euro-denominated debt principal designated as a net investment hedge has a contractual maturity of December 1, 2027.

15

The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 in our accompanying unaudited consolidated statements of operations. Refer to Note M – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our accompanying unaudited consolidated statements of comprehensive income (loss).

	Effect of Hedging Relationships on Accumulated Other Comprehensive Income
	Amount Recognized in OCI on Hedges						Unaudited Consolidated Statements of Operations(1)			Amount Reclassified from AOCI into Earnings
(in millions)	Pre-Tax Gain (Loss)		Tax Benefit (Expense)		Gain (Loss) Net of Tax		Location of Amount Reclassified and Total Amount of Line Item			Pre-Tax (Gain) Loss		Tax (Benefit) Expense		(Gain) Loss Net of Tax
Three Months Ended March 31, 2021
Forward currency contracts
Cash flow hedges	$	171	$	(39)	$	133	Cost of products sold	$	894	$	(6)	$	1	$	(5)
Net investment hedges(2)	52		(12)		40		Interest expense	82		(6)		1		(5)
Foreign currency-denominated debt
Net investment hedges(3)	48		(11)		37		Other, net	(37)		—		—		—
Interest rate derivative contracts
Cash flow hedges	—		—		—		Interest expense	82		1		—		1
Three Months Ended March 31, 2020
Forward currency contracts
Cash flow hedges	$	119	$	(27)	$	92	Cost of products sold	$	806	$	(23)	$	5	$	(18)
Net investment hedges(2)	22		(26)		(4)		Interest expense	88		(6)		1		(5)
Foreign currency-denominated debt
Net investment hedges(3)	24		(2)		22		Other, net	36		—		—		—
Interest rate derivative contracts
Cash flow hedges	—		—		—		Interest Expense	88		1		—		1

(1)    In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial.

(2)    For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.

(3)    For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.

As of March 31, 2021, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):

Designated Hedging Instrument	FASB ASC Topic 815 Designation	Location on Unaudited Consolidated Statements of Operations	Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Forward currency contracts	Cash flow hedge	Cost of products sold	$	79
Forward currency contracts	Net investment hedge	Interest expense	9
Interest rate derivative contracts	Cash flow hedge	Interest expense	(5)

16

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:

	Location on Unaudited Consolidated Statements of Operations	Three Months Ended March 31,
(in millions)		2021		2020
Net gain (loss) on currency hedge contracts	Other, net	$	(1)	$	(15)
Net gain (loss) on currency transaction exposures	Other, net	(1)		8
Net currency exchange gain (loss)		$	(2)	$	(7)

Fair Value Measurements

FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (FASB ASC Topic 820) and considering the estimated amount we would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative and nonderivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The following are the balances of our derivative and nonderivative assets and liabilities:

	Location on Unaudited Consolidated Balance Sheets(1)	As of
(in millions)		March 31, 2021		December 31, 2020
Derivative and Nonderivative Assets:
Designated Hedging Instruments
Forward currency contracts	Other current assets	$	122	$	53
Forward currency contracts	Other long-term assets	209		109
		332		162
Non-Designated Hedging Instruments
Forward currency contracts	Other current assets	67		79
Total Derivative and Nonderivative Assets		$	399	$	242
Derivative and Nonderivative Liabilities:
Designated Hedging Instruments
Forward currency contracts	Other current liabilities	$	22	$	44
Forward currency contracts	Other long-term liabilities	28		54
Foreign currency-denominated debt(2)	Other long-term liabilities	1,044		1,094
		1,094		1,191
Non-Designated Hedging Instruments
Forward currency contracts	Other current liabilities	57		71
Total Derivative and Nonderivative Liabilities		$	1,151	$	1,262

(1)    We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.

(2)    Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.

17

Recurring Fair Value Measurements

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The category of a financial asset or a financial liability within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

•Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

•Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

•Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

Assets and liabilities measured at fair value on a recurring basis consist of the following:

	As of
	March 31, 2021								December 31, 2020
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market funds and time deposits	$	1,759	$	—	$	—	$	1,759	$	1,584	$	—	$	—	$	1,584
Publicly-held equity securities	213		—		—		213		414		—		—		414
Hedging instruments	—		399		—		399		—		242		—		242
Licensing arrangements	—		—		338		338		—		—		365		365
	$	1,971	$	399	$	338	$	2,708	$	1,998	$	242	$	365	$	2,605
Liabilities
Hedging instruments	$	—	$	1,151	$	—	$	1,151	$	—	$	1,262	$	—	$	1,262
Contingent consideration liability	—		—		398		398		—		—		196		196
Licensing arrangements	—		—		356		356		—		—		407		407
	$	—	$	1,151	$	754	$	1,906	$	—	$	1,262	$	603	$	1,865

Our investments in money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as Cash and cash equivalents within our accompanying unaudited consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In addition to $1.759 billion invested in money market funds and time deposits as of March 31, 2021 and $1.584 billion as of December 31, 2020, we held $257 million in interest-bearing and non-interest-bearing bank accounts as of March 31, 2021 and $150 million as of December 31, 2020.

Our recurring fair value measurements using Level 3 inputs related to our contingent consideration liability. Refer to Note B – Acquisitions, Divestitures and Strategic Investments for a discussion of the changes in the fair value of our contingent consideration liability. In addition, our recurring fair value measurements using Level 3 inputs related to our licensing arrangements, including the contractual right to receive future royalty payments related to the Zytiga™ Drug. We recognized a financial asset and associated liability for our licensing arrangements at fair value in our accompanying unaudited consolidated balance sheets using the fair value option in accordance with FASB ASC Topic 825, Financial Instruments.

As of March 31, 2021, we have recorded the fair value of the financial asset and associated liability using a discounted cash flow approach considering the probability-weighted expected future cash flows to be generated by the royalty stream. The fair value of the financial liability also considers the related contractual provisions that govern our payment obligations. Significant increases or decreases in projected cash flows of the royalty stream and the related contractual provisions that govern our payment obligations, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement of the licensing arrangements' financial asset and liability as of March 31, 2021.

18

The recurring Level 3 fair value measurements of our licensing arrangements recognized in our accompanying unaudited consolidated balance sheets as of March 31, 2021 include the following significant unobservable inputs:

Licensing Arrangements	Fair Value as of March 31, 2021	Valuation Technique	Unobservable Input	Range				Weighted Average (1)
Financial Asset	$338 million	Discounted Cash Flow	Discount Rate	15%				15%
			Projected Year of Payment	2021		-	2025	2023
Financial Liability	$356 million	Discounted Cash Flow	Discount Rate	12	%	-	15%	13%
			Projected Year of Payment	2021		-	2026	2023

(1)    Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.

We own the contractual right to receive 50 percent of the future royalty payments from the licensee and remit such payments to the inventors associated with the intellectual property. Royalty payments we receive reduce the fair value of the financial asset and are presented within Proceeds from royalty rights, and payments we remit to inventors reduce the fair value of the financial liability and are presented within Payments for royalty rights within our unaudited consolidated statements of cash flows. We sold our right to receive and retain the other 50 percent of the future royalty payments in 2019 for an upfront cash payment, which we accounted for as a secured borrowing in accordance with FASB ASC Topic 860, Transfers and Servicing. Although we sold these rights, we continue to recognize at fair value the future royalty payments as a financial asset and associated liability. Royalty payments associated with the rights we sold no longer impact our cash flows, and we present this activity as Non-cash impact of transferred royalty rights in the supplemental information to our unaudited consolidated statements of cash flows. We reduce the fair value of the financial asset and associated liability when such non-cash activity occurs.

Changes in the fair value of our licensing arrangements' financial asset were as follows:

(in millions)
Balance as of December 31, 2020	$	365
Proceeds from royalty rights	(22)
Non-cash impact of transferred royalty rights	(22)
Fair value adjustment (expense) benefit	16
Balance as of March 31, 2021	$	338

Changes in the fair value of our licensing arrangements' financial liability were as follows:

(in millions)
Balance as of December 31, 2020	$	407
Payments for royalty rights	(42)
Non-cash impact of transferred royalty rights	(22)
Fair value adjustment expense (benefit)	13
Balance as of March 31, 2021	$	356

Non-Recurring Fair Value Measurements

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods after initial recognition. The fair value of a measurement alternative investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions, Divestitures and Strategic Investments for a discussion of our strategic investments, and Note C – Goodwill and Other Intangible Assets for a discussion of the fair values of our intangible assets including goodwill.

19

The fair value of our outstanding debt obligations was $10.225 billion as of March 31, 2021, including $1.067 billion relating to our euro-denominated December 2027 Notes, and $10.774 billion as of December 31, 2020, including $1.118 billion relating to our euro-denominated December 2027 Notes. We determined fair value by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy, and face value for commercial paper, term loans and credit facility borrowings outstanding. Refer to Note E – Contractual Obligations and Commitments for a discussion of our debt obligations.

NOTE E – CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Borrowings and Credit Arrangements

We had total debt outstanding of $9.095 billion as of March 31, 2021 and $9.143 billion as of December 31, 2020, with current maturities of $13 million as of March 31, 2021 and $13 million as of December 31, 2020. The debt maturity schedule for our long-term debt obligations is presented below:

(in millions, except interest rates)	Issuance Date	Maturity Date	As of				Coupon Rate(1)
			March 31, 2021		December 31, 2020
May 2022 Notes	May 2015	May 2022	$	250	$	250	3.375%
October 2023 Notes	August 2013	October 2023	244		244		4.125%
March 2024 Notes	February 2019	March 2024	850		850		3.450%
May 2025 Notes	May 2015	May 2025	523		523		3.850%
June 2025 Notes	May 2020	June 2025	500		500		1.900%
March 2026 Notes	February 2019	March 2026	850		850		3.750%
December 2027 Notes	November 2019	December 2027	1,055		1,105		0.625%
March 2028 Notes	February 2018	March 2028	434		434		4.000%
March 2029 Notes	February 2019	March 2029	850		850		4.000%
June 2030 Notes	May 2020	June 2030	1,200		1,200		2.650%
November 2035 Notes(2)	November 2005	November 2035	350		350		7.000%
March 2039 Notes	February 2019	March 2039	750		750		4.550%
January 2040 Notes	December 2009	January 2040	300		300		7.375%
March 2049 Notes	February 2019	March 2049	1,000		1,000		4.700%
Unamortized Debt Issuance Discount and Deferred Financing Costs		2022 - 2049	(85)		(88)
Unamortized Gain on Fair Value Hedges		2023	5		5
Finance Lease Obligation		Various	6		7
Long-term debt			$	9,082	$	9,130

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

(1)    Coupon rates are semi-annual, except for the euro-denominated December 2027 Notes, which bear an annual coupon.

(2)    Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher.

Revolving Credit Facility

We maintain a $2.750 billion revolving credit facility (Revolving Credit Facility) with a global syndicate of commercial banks that matures on December 19, 2023 with one-year extension options, subject to certain conditions. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the Revolving Credit Facility. The credit agreement requires that we comply with the financial covenant described below. There were no amounts outstanding under the Revolving Credit Facility as of March 31, 2021 or December 31, 2020.

20

Financial Covenant

As of and through March 31, 2021, we were in compliance with the financial covenant required by all existing credit facilities described above:

	Covenant Requirement	Actual
	as of March 31, 2021	as of March 31, 2021
Maximum permitted leverage ratio(1)	4.50 times	3.29 times

(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended.

On April 21, 2020, we entered into an agreement with our banking syndicates to amend the financial covenant requirement for all of our outstanding credit arrangements as follows: (i) established a deemed Consolidated EBITDA of $671 million for the second, third and fourth quarters of 2020, reflecting average quarterly Consolidated EBITDA, as defined in the credit agreements, for 2018 and 2019; and (ii) maintain the maximum permitted leverage ratio of 4.75 times through the remainder of 2020, with a step-down for each succeeding fiscal quarter end, beginning with the first quarter of 2021, to 4.50 times, 4.25 times, 4.00 times and ultimately 3.75 times for the fourth quarter of 2021 and through the remaining term of the facility.

The financial covenant requirement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreements, through maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of March 31, 2021, we had $57 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreements, are excluded from the calculation of consolidated EBITDA, as defined by the agreements, provided that the sum of any excluded net cash litigation payments do not exceed $2.624 billion in the aggregate. As of March 31, 2021, we had $809 million of the litigation exclusion remaining.

Any inability to maintain compliance with this amended covenant could require us to seek to further renegotiate the terms of our Revolving Credit Facility or seek waivers from compliance with this covenant, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers on terms acceptable to us. In this case, all Revolving Credit Facility commitments would terminate, and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our Revolving Credit Facility may negatively impact the credit ratings assigned to our commercial paper program, which may impact our ability to refinance any then outstanding commercial paper as it becomes due and payable.

Commercial Paper

Our commercial paper program is backed by the Revolving Credit Facility, as discussed above, and outstanding commercial paper directly reduces borrowing capacity under the Revolving Credit Facility. We did not have any commercial paper outstanding as of March 31, 2021 or December 31, 2020.

Senior Notes

We had senior notes outstanding of $9.155 billion as of March 31, 2021 and $9.205 billion as of December 31, 2020. Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We have accounts receivable factoring programs in certain European countries and with commercial banks in China and Japan which include promissory notes discounting programs. We account for our factoring programs as sales under FASB ASC Topic 860, Transfers and Servicing. We have no retained interest in the transferred receivables, other than collection and administration, and once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy.

21

Amounts de-recognized for accounts and notes receivable, which are excluded from Trade accounts receivable, net in our accompanying unaudited consolidated balance sheets, are aggregated by contract denominated currency below (in millions):

Factoring Arrangements	As of March 31, 2021				As of December 31, 2020
	Amount De-recognized		Weighted Average Interest Rate		Amount De-recognized		Weighted Average Interest Rate
Euro denominated	$	149	2.0	%	$	148	1.9	%
Yen denominated	198		0.6	%	240		0.6	%
Renminbi denominated	—		3.5	%	—		3.5	%

Other Contractual Obligations and Commitments

We had outstanding letters of credit of $126 million as of March 31, 2021 and $124 million as of December 31, 2020, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2021 and December 31, 2020, none of the beneficiaries had drawn upon the letters of credit or guarantees, and accordingly, we have not recognized a related liability for our outstanding letters of credit in our accompanying unaudited consolidated balance sheets as of March 31, 2021 and December 31, 2020.

Refer to Note F – Contractual Obligations and Commitments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information on our borrowings and credit agreements.

NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited consolidated balance sheets are as follows:

Cash, cash equivalents, restricted cash and restricted cash equivalents

	As of
(in millions)	March 31, 2021		December 31, 2020
Cash and cash equivalents	$	2,016	$	1,734
Restricted cash and restricted cash equivalents in Other current assets	184		208
Restricted cash equivalents in Other long-term assets	53		52
	$	2,253	$	1,995

Trade accounts receivable, net

	As of
(in millions)	March 31, 2021		December 31, 2020
Trade accounts receivable	$	1,733	$	1,637
Allowance for credit losses	(101)		(105)
	$	1,631	$	1,531

22

The following is a rollforward of our Allowance for credit losses:

	Three Months Ended March 31,
(in millions)	2021		2020
Beginning balance	$	105	$	74
Cumulative effect adjustment(1)	n/a		10
Credit loss expense	2		9
Write-offs	(6)		(6)
Ending balance	$	101	$	87

(1)    Effective January 1, 2020, we adopted FASB ASC Topic 326, Financial Instruments - Credit Losses using the modified retrospective method, which requires that we recognize credit loss reserves when financial assets are established if credit losses are expected over the asset’s contractual life. Refer to Note R – New Accounting Pronouncements to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

In accordance with FASB ASC Topic 326, we record credit loss reserves to Allowance for credit losses when we establish Trade accounts receivable if credit losses are expected over the asset's contractual life. We base our estimates of credit loss reserves on historical experience and adjust, as necessary, to reflect current conditions using reasonable and supportable forecasts not already reflected in the historical loss information. We utilize an accounts receivable aging approach to determine the reserve to record at accounts receivable commencement for certain customers, applying country or region-specific factors. In performing the assessment of outstanding accounts receivable, regardless of country or region, we may consider significant factors relevant to collectability, including those specific to a customer such as bankruptcy, lengthy average payment cycles and type of account.

We closely monitor outstanding receivables for potential collection risks, including those that may arise from economic conditions. Our sales to government-owned or supported customers, particularly in southern Europe, are subject to an increased number of days outstanding prior to payment relative to other countries. More recently, we have seen an increase in the volume of our U.S. business conducted in ambulatory surgery centers. Many of these customers are smaller than those we have historically done business with and may have limited liquidity. We have adjusted our estimates of credit loss reserves for these customers, regions and conditions based on collection trends.

Inventories

	As of
(in millions)	March 31, 2021		December 31, 2020
Finished goods	$	921	$	893
Work-in-process	120		109
Raw materials	366		349
	$	1,407	$	1,351

Other current assets

	As of
(in millions)	March 31, 2021		December 31, 2020
Restricted cash and restricted cash equivalents	$	184	$	208
Derivative assets	190		133
Licensing arrangements	146		148
Other	335		263
	$	855	$	751

23

Property, plant and equipment, net

	As of
(in millions)	March 31, 2021		December 31, 2020
Land	$	104	$	104
Buildings and improvements	1,298		1,292
Equipment, furniture and fixtures	3,462		3,465
Capital in progress	418		446
	5,282		5,308
Less: accumulated depreciation	3,229		3,224
	$	2,053	$	2,084

Depreciation expense was $83 million for the first quarter of 2021 and $76 million for the first quarter of 2020.

Other long-term assets

	As of
(in millions)	March 31, 2021		December 31, 2020
Restricted cash equivalents	$	53	$	52
Operating lease right-of-use assets	407		458
Derivative assets	209		109
Investments	643		918
Licensing arrangements	191		218
Other	211		166
	$	1,714	$	1,921

Accrued expenses

	As of
(in millions)	March 31, 2021		December 31, 2020
Legal reserves	$	415	$	505
Payroll and related liabilities	710		681
Rebates	335		331
Contingent consideration liability	23		26
Other	578		656
	$	2,060	$	2,197

Other current liabilities

	As of
(in millions)	March 31, 2021		December 31, 2020
Deferred revenue	$	139	$	138
Licensing arrangements	148		153
Taxes payable	151		158
Liabilities held for sale	—		200
Other	268		307
	$	705	$	958

24

Other long-term liabilities

	As of
(in millions)	March 31, 2021		December 31, 2020
Accrued income taxes	$	557	$	547
Legal reserves	41		64
Contingent consideration liability	375		171
Licensing arrangements	208		253
Operating lease liabilities	353		401
Deferred revenue	264		257
Other	572		615
	$	2,370	$	2,309

NOTE G – INCOME TAXES

Our effective tax rate from continuing operations is presented below:

	Three Months Ended March 31,
	2021		2020
Effective tax rate from continuing operations	(4.9)	%	52.3	%

The change in our reported tax rates for the first quarter of 2021, as compared to the same period in 2020, relates primarily to a shift in geographical mix of earnings to lower-tax jurisdictions, and the impact of certain receipts and charges that are taxed at different rates than our effective tax rate. These receipts and charges include acquisition/divestiture-related net gains, as well as certain discrete tax items primarily related to changes to unrecognized tax benefits, and foreign return-to-provision adjustments, foreign audit settlements and expenses associated with recent acquisitions.

As of March 31, 2021, we had $274 million of gross unrecognized tax benefits, of which a net $189 million, if recognized, would affect our effective tax rate. As of December 31, 2020, we had $261 million of gross unrecognized tax benefits, of which a net $183 million, if recognized, would affect our effective tax rate. The change in our gross unrecognized tax benefit is primarily related to positions on new entities we acquired with recent acquisitions and restructuring activities.

It is reasonably possible that within the next 12 months we will resolve multiple issues with foreign, federal and state taxing authorities, resulting in a reduction in our balance of unrecognized tax benefits of up to $29 million.

Economic stimulus legislation has been enacted in many countries in response to the COVID-19 pandemic. In the U.S., the Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted on March 27, 2020, provided an estimated $2.2 trillion in COVID-19 pandemic-related relief, and included tax relief and government loans, subsidies and other relief for entities in affected industries. While we have not applied for government loans, we have taken advantage of the benefits offered in multiple jurisdictions, including the U.S. provision allowing taxpayers to defer payment of the employer portion of certain payroll taxes incurred in 2020. This allowed us to preserve cash generated from operations to service our debt obligations and other near-term commitments, and is expected to be paid in full by the end of 2022 as permitted by the legislation.

25

NOTE H – COMMITMENTS AND CONTINGENCIES

The medical device market in which we participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These dynamics frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable rulings in several other matters; however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $455 million as of March 31, 2021 and $569 million as of December 31, 2020 and includes certain estimated costs of settlement, damages and defense. The decrease in our legal accrual was mainly due to settlement payments associated with product liability cases or claims related to transvaginal surgical mesh products. A portion of our legal accrual is already funded through our qualified settlement fund (QSF), which is included in restricted cash and restricted cash equivalents in Other current assets of $184 million as of March 31, 2021 and $208 million as of December 31, 2020. Refer to Note F – Supplemental Balance Sheet Information for additional information.

We recorded litigation-related net charges of $4 million during the first quarter of 2021, related to the finalization of a settlement with a coalition of state attorneys general associated with claims regarding our transvaginal surgical mesh products. We did not record any litigation-related net charges during the first quarter of 2020.

We record certain legal and product liability charges, credits and costs of defense, which we consider to be unusual or infrequent and significant as Litigation-related net charges (credits) in our accompanying unaudited consolidated financial statements. All other legal and product liability charges, credits and costs are recorded within Selling, general and administrative expenses in our accompanying unaudited consolidated statements of operations. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our financial covenant.

26

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our most recent Annual Report on Form 10-K and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be reasonably estimated.

Patent Litigation

On October 28, 2015, the Company filed suit against Cook Group Limited and Cook Medical LLC (collectively, “Cook”) in the United States District Court for the District of Delaware (1:15-cv-00980) alleging infringement of certain Company patents regarding Cook’s Instinct Endoscopic Hemoclip. The case was transferred to the District Court for the Southern District of Indiana. Cook filed seven Inter Partes Review (“IPR”) requests with the U.S. Patent and Trademark Office (USPTO) against the four asserted patents. All IPRs have concluded and Cook and the Company both appealed the Patent Office’s IPR decisions to the Federal Circuit Court of Appeals. On April 30, 2020, the U.S. Court of Appeals ruled that claims from two of the Company's patents remain valid, remanding two of the patents for further review by the USPTO’s Patent Trial and Appeal Board. In November 2020, the Patent Office issued remand rulings invalidating several additional claims. The district court stayed the case pending the appeals court decision on the IPRs, which is now complete. The case is proceeding before the United States District Court for the Southern District of Indiana, with the Company asserting two patents against Cook. Trial is anticipated in 2022.

On February 23, 2021, Nevro Corp. (“Nevro”) filed a complaint against the Company in the United States District Court for the District of Delaware (21-cv-258). The complaint alleges infringement of five Nevro patents by certain of the Company’s spinal cord stimulation systems.

Product Liability Litigation

As of April 21, 2021, approximately 54,000 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse have been asserted against us. As of April 21, 2021, we have entered into master settlement agreements in principle or are in the final stages of entering one with certain plaintiffs' counsel to resolve an aggregate of approximately 52,000 cases and claims, adjusted to reflect the Company’s analysis of expected non-participation and duplicate claims. These master settlement agreements provide that the settlement and distribution of settlement funds to participating claimants are conditional upon, among other things, achieving minimum required claimant participation thresholds. Of the approximately 52,000 cases and claims, approximately 48,000 have met the conditions of the settlement and are final. All settlement agreements were entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing. The pending cases are in various federal and state courts in the U.S. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases were specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. The Court issued an Order closing the MDL on February 11, 2021, as all cases that had been pending were dismissed or remanded to courts of primary jurisdiction. Outside the United States, there are fewer than 70 claims in the United Kingdom. In the first quarter of 2021, two class actions were filed against the Company in Australia, where there are fewer than 125 claims. There are also fewer than 10 cases in Canada, inclusive of one certified class action, which has settled and received Court approval. On April 16, 2019, the U.S. Food and Drug Administration (FDA) ordered that all manufacturers of surgical mesh products indicated for the transvaginal repair of pelvic organ prolapse stop selling and distributing their products in the United States immediately, stemming from the FDA’s 2016 reclassification of these devices to class III (high risk) devices, and as a result, the Company ceased global sales and distribution of surgical mesh products indicated for transvaginal pelvic organ prolapse. In April 2021 the Company's Board of Directors received a shareholder demand under section 220 of the Delaware General Corporation Law, for inspection of books and records. The Company has notified our insurer and retained counsel to respond to the demand.

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical

27

mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

We are currently named a defendant in 129 filed product liability cases involving our Greenfield Vena Cava Filter, which we discontinued marketing and active selling in the fourth quarter of 2018, alleging various injuries, including perforation of the vena cava, post-implant deep vein thrombosis, fracture, and other injuries. Most of the filed cases are part of a consolidated matter in Middlesex County, Massachusetts. We have received notice of an additional 553 claims, none of which have been filed.

Other Proceedings

On September 6, 2019, Boston Scientific Corporation, Boston Scientific Scimed, Inc., and Fortis Advisors, LLC, as a Securityholder Representative for the former Securityholders of nVision Medical Corp. filed a declaratory judgment action against BioCardia, Inc. in the United States District Court for the Northern District of California to address threats and allegations by BioCardia challenging inventorship and ownership of various patents that Boston Scientific Corporation acquired through an April 13, 2018 merger with nVision as well as related threats and allegations by BioCardia of trade secret misappropriation and unjust enrichment. On December 11, 2019, BioCardia filed an amended answer and counterclaims. On April 23, 2020, BioCardia filed a complaint against nVision, which had not been named as a defendant in the original case. On May 22, 2020, BioCardia amended its complaint against nVision to add twenty former nVision shareholders as defendants. On August 20, 2020, BioCardia again amended its complaint against Boston Scientific Corporation/Boston Scientific Scimed, Inc./Fortis Advisors, LLC and its complaint against nVision/nVision shareholders. On April 8, 2021, the parties settled the dispute, and, on April 12, 2021, the parties filed stipulations with the court to dismiss the remaining legal proceedings. We expect the settlement will not result in any material benefit or liability to the Company.

On December 4, 2020 Enrique Jevons, individually and on behalf of all others similarly situated, filed a class action complaint against the Company, Michael F. Mahoney and Daniel J. Brennan, stemming from the recall and retirement of the LOTUS Edge™ Aortic Valve System (LOTUS System) in United States District Court for the Eastern District of New York. On December 14, 2020, the parties agreed to transfer the case to the United States District Court for the District of Massachusetts. On December 16, 2020, Mariano Errichiello, individually and on behalf of all other similarly situated, filed a second, materially similar class action complaint against the Company, Michael F. Mahoney, Joseph M. Fitzgerald, and Daniel J. Brennan in the United States District Court for the District of Massachusetts. Subsequently, on March 30, 2021, the Court consolidated the two actions, and appointed Mariano Errichiello as the lead plaintiff. Counsel for Mr. Errichiello are required to file an Amended Complaint on or before June 4, 2021, in response to which the Company expects to bring a Motion to Dismiss. On December 15, 2020, the Securities and Exchange Commission’s Boston Regional Office (Boston SEC) notified the Company that it is conducting an investigation related to the Company’s decision to retire the LOTUS System, and issued a voluntary request for documents and information related to that decision. On February 10, 2021, the Boston SEC issued a second voluntary request for additional documents and information. The Company is cooperating fully with the investigation. On February 8, 2021, the Company received a letter from The Vladimir Gusinsky Revocable Trust, a shareholder, demanding that the Company’s Board of Directors conduct an investigation into actions by the Company’s directors and executive officers regarding statements made about the effectiveness and commercial viability of the LOTUS System. The Trust subsequently agreed to stay its demand, pending the outcome of any dispositive motion against the Amended Complaint in the class action complaint described above.

Matters Concluded Since December 31, 2020

On February 23, 2015, a judge for the Court of Modena (Italy) ordered a trial for the Company and three of its employees, as well as numerous other defendants charged in criminal proceedings. The charges arise from allegations that the defendants made improper donations to certain healthcare providers and other employees of the Hospital of Modena in order to induce them to conduct unauthorized clinical trials, as well as related government fraud in relation to the financing of such clinical trials. A trial began on February 24, 2016. On November 10, 2017, the Court issued a ruling that convicted one Company employee but acquitted two others and levied a fine of €245 thousand against us and imposed joint and several civil damages of €620 thousand on all defendants. We continue to deny these allegations, and timely appealed the decision on May 10, 2018. On November 9, 2020, the Court of Appeal in Bologna reversed the judgements against the Company and its employee and acquitted them of all charges. This judgment of acquittal became final as to the Company and its employee on April 15, 2021 when the prosecution chose not to appeal.

During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general regarding our transvaginal surgical mesh products and related alleged violations of states’ consumer protection statutes. On December 12, 2019, the Mississippi Attorney General filed suit against us in a Mississippi state court alleging violations of the Mississippi

28

Consumer Protection Act. In the fourth quarter of 2020 and the first quarter of 2021, we reached settlements with 48 states, including Mississippi, and the District of Columbia. These settlements were finalized in March of 2021.

NOTE I – STOCKHOLDERS' EQUITY

Preferred Stock

We are authorized to issue 50 million shares of preferred stock in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by our stockholders.

On May 27, 2020, we completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock (MCPS), Series A at a price to the public and liquidation preference of $100 per share. The net proceeds from the MCPS offering were approximately $975 million after deducting underwriting discounts and commissions and offering expenses. As of March 31, 2021, our MCPS had an aggregate liquidation preference of $1.006 billion.

Holders of MCPS will be entitled to receive, when, as and if declared by our Board of Directors, or an authorized committee thereof, out of funds legally available for payment, cumulative dividends at the annual rate of 5.50% of the liquidation preference of $100 per share, payable in cash or, subject to certain limitations, by delivery of shares of common stock or any combination of cash and shares of common stock, at our election; provided, however, that any unpaid dividends on the MCPS will continue to accumulate as described in the Certificate of Designations.

Subject to certain exceptions, no dividend or distribution will be declared or paid on shares of our common stock, and no common stock will be purchased, redeemed or otherwise acquired for consideration by us or any of our subsidiaries unless, in each case, all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid, or a sufficient amount of cash or number of shares of common stock has been set apart for the payment of such dividends, on all outstanding shares of MCPS. In the event of our voluntary or involuntary liquidation, winding-up or dissolution, no distribution of our assets may be made to holders of our common stock until we have paid holders of our MCPS, each of which will be entitled to receive a liquidation preference in the amount of $100 per share plus accumulated and unpaid dividends.

Unless earlier converted, each share of MCPS will automatically convert on June 1, 2023, subject to postponement for certain market disruption events, into between 2.3834 and 2.9197 shares of common stock, subject to customary anti-dilution adjustments. The number of shares of common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately preceding June 1, 2023.

The MCPS is not subject to any redemption, sinking fund or other similar provisions. However, at our option, we may purchase or exchange the MCPS from time to time in the open market, by tender or exchange offer or otherwise, without the consent of, or notice to, holders of MCPS. The holders of the MCPS will not have any voting rights, with limited exceptions.

In the first quarter of 2021, the Audit Committee of our Board of Directors (the Committee), pursuant to authority delegated to such committee by our Board of Directors, declared and we paid a cash dividend of $1.375 per MCPS share to holders of our MCPS as of February 15, 2021, representing a dividend period from December 2020 through February 2021. On April 26, 2021, the Committee declared a cash dividend of $1.375 per MCPS share to holders of our MCPS as of May 15, 2021, representing a dividend period from March through May 2021. We have presented cumulative, unpaid dividends within Accrued expenses within our unaudited consolidated balance sheet as of March 31, 2021.

Refer to Note L – Stockholders' Equity to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for information on the pertinent rights and privileges of our outstanding common stock.

29

NOTE J – WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended March 31,
(in millions)	2021	2020
Weighted average shares outstanding - basic	1,418.7	1,397.4
Net effect of common stock equivalents	12.1	16.1
Weighted average shares outstanding - assuming dilution	1,430.8	1,413.5

The following securities were excluded from the calculation of weighted average shares outstanding - assuming dilution because their effect in the periods presented below would have been anti-dilutive:

	Three Months Ended March 31,
(in millions)	2021	2020
Stock options outstanding(1)	6	6
MCPS(2)	24	n/a

(1)    Represents stock options outstanding pursuant to our employee stock-based compensation plans with exercise prices that were greater than the average fair market value of our common stock for the related periods.

(2)    Represents common stock issuable upon the conversion of MCPS. Refer to Note I – Stockholders' Equity for additional information.

We base Net income (loss) per common share - assuming dilution upon the weighted-average number of common shares and common stock equivalents outstanding during each year. Potential common stock equivalents are determined using the treasury stock method. We exclude stock options, stock awards and MCPS from the calculation if the effect would be anti-dilutive. The dilutive effect of MCPS is calculated using the if-converted method. The if-converted method assumes that these securities were converted to shares of common stock at the beginning of the reporting period to the extent that the effect is dilutive.

For the first quarter 2021, the effect of assuming the conversion of MCPS into shares of common stock was anti-dilutive, and therefore excluded from the calculation of earnings per share (EPS). Accordingly, Net income was reduced by cumulative Preferred stock dividends, as presented in our accompanying unaudited consolidated statements of operations, for purposes of calculating Net income available to common stockholders.

We issued approximately four million shares of our common stock in the first quarter of 2021 and four million shares in the first quarter of 2020, following the exercise of stock options, vesting of deferred stock units or purchases under our employee stock purchase plan. We did not repurchase any shares of our common stock in the first quarter of 2021 or 2020. On December 14, 2020, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $1.000 billion of our common stock. As of March 31, 2021, we had the full amount remaining available under the authorization.

NOTE K – SEGMENT REPORTING

Our seven core businesses are organized into three reportable segments: 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, goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits) and European Union (EU) Medical Device Regulation (MDR) implementation costs. Although we exclude these amounts from operating income of reportable segments, they are included in reported Income (loss) before income taxes in our accompanying unaudited consolidated statements of operations and are included in the reconciliation below.

30

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

	Three Months Ended March 31,
Net sales	2021			2020
MedSurg	$	860		$	774
Rhythm and Neuro	750			703
Cardiovascular	1,129			1,026
Total net sales of reportable segments	2,739			2,502
All other (Specialty Pharmaceuticals)(1)	13			41
Consolidated net sales	$	2,752		$	2,543
	Three Months Ended March 31,
Income (loss) before income taxes	2021			2020
MedSurg	$	332		$	259
Rhythm and Neuro	148			99
Cardiovascular	338			199
Total operating income of reportable segments	819			556
All other (Specialty Pharmaceuticals)(1)	4			26
Unallocated amounts:
Corporate expenses, including hedging activities	(153)			(33)
Intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits) and EU MDR implementation costs	(114)			(202)
Amortization expense	(185)			(201)
Operating income (loss)	370			146
Other expense, net	(45)			(124)
Income (loss) before income taxes	$	325		$	22
(1) On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales and income (loss) before income taxes for the first quarter of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.
Operating income of reportable segments as a percentage of net sales of reportable segments	Three Months Ended March 31,
	2021			2020
MedSurg	38.6		%	33.4		%
Rhythm and Neuro	19.7		%	14.1		%
Cardiovascular	30.0		%	19.4		%

31

NOTE L – REVENUE

We generate revenue primarily from the sale of single-use medical devices and present revenue net of sales taxes in our accompanying unaudited consolidated statements of operations. The following tables disaggregate our revenue from contracts with customers by business and geographic region (in millions):

	Three Months Ended March 31,
	2021						2020
Businesses	U.S.		Int'l		Total		U.S.		Int'l		Total
Endoscopy	$	280	$	219	$	499	$	256	$	186	$	442
Urology and Pelvic Health	257		104		361		237		95		332
Cardiac Rhythm Management	276		193		469		255		182		437
Electrophysiology	30		53		83		32		43		74
Neuromodulation	151		46		198		151		40		191
Interventional Cardiology	343		352		696		297		336		633
Peripheral Interventions	238		195		433		224		168		392
Specialty Pharmaceuticals	10		4		13		37		4		41
Net Sales	$	1,586	$	1,166	$	2,752	$	1,489	$	1,054	$	2,543

On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales for the first quarter of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.

	Three Months Ended March 31,
Geographic Regions	2021		2020
U.S.	$	1,577	$	1,452
EMEA (Europe, Middle East and Africa)	604		552
APAC (Asia-Pacific)	473		409
LACA (Latin America and Canada)	85		89
Medical Devices	2,739		2,502
U.S.	10		37
International	4		4
Specialty Pharmaceuticals	13		41
Net Sales	$	2,752	$	2,543
Emerging Markets(1)	$	317	$	273

(1)    We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess our list of Emerging Markets countries, and effective January 1, 2021, modified our list to include the following countries: Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Taiwan, Thailand, Turkey and Vietnam. We have revised prior year amounts to conform to the current year's presentation. The revision had an immaterial impact on previously reported Emerging Markets net sales.

Deferred Revenue

Contract liabilities are classified within Other current liabilities and Other long-term liabilities in our accompanying unaudited consolidated balance sheets. Our deferred revenue balance was $403 million as of March 31, 2021 and $395 million as of December 31, 2020. Our contractual liabilities are primarily composed of deferred revenue related to the LATITUDE™ Patient Management System within our Cardiac Rhythm Management (CRM) business, for which revenue is recognized over the average service period based on device and patient longevity. Our contractual liabilities also include deferred revenue related to the LUX-Dx™ Insertable Cardiac Monitor (ICM) system, also within our CRM business, for which revenue is recognized over the average service period based on device longevity and usage. We recognized revenue of $36 million in the first quarter of 2021 that was included in the above contract liability balance as of December 31, 2020. We have elected not to disclose the transaction price allocated to unsatisfied performance obligations when the original expected contract duration is one year or

32

less. In addition, we have not identified material unfulfilled performance obligations for which revenue is not currently deferred.

Variable Consideration

We generally allow our customers to return defective, damaged and, in certain cases, expired products for credit. We base our estimate for sales returns upon historical trends and record the amount as a reduction to revenue when we sell the initial product. In addition, we may allow customers to return previously purchased products for next-generation product offerings. For these transactions, we defer recognition of revenue on the sale of the earlier generation product based upon an estimate of the amount of product to be returned when the next-generation products are shipped to the customer. Uncertain timing of next-generation product approvals, variability in product launch strategies, product recalls and variation in product utilization all affect our estimates related to sales returns and could cause actual returns to differ from these estimates.

We also offer sales rebates and discounts to certain customers. We treat sales rebates and discounts as a reduction of revenue and classify the corresponding liability as current. We estimate rebates for products where there is sufficient historical information available to predict the volume of expected future rebates. If we are unable to reasonably estimate the expected rebates, we record a liability for the maximum rebate percentage offered. We have entered certain agreements with group purchasing organizations to sell our products to participating hospitals at negotiated prices. We recognize revenue from these agreements following the same revenue recognition criteria discussed above.

NOTE M – CHANGES IN OTHER COMPREHENSIVE INCOME

The following tables provide the reclassifications out of Other comprehensive income (loss), net of tax:

(in millions)	Foreign Currency Translation Adjustments		Net Change in Derivative Financial Instruments		Net Change in Defined Benefit Pensions and Other Items		Total
Balance as of December 31, 2020	$	218	$	36	$	(47)	$	207
Other comprehensive income (loss) before reclassifications	48		133		1		182
(Income) loss amounts reclassified from accumulated other comprehensive income(1)	(131)		(4)		—		(135)
Total other comprehensive income (loss)	(83)		129		1		47
Balance as of March 31, 2021	$	134	$	165	$	(45)	$	254

(1)    In connection with the completion of the divestiture of the Specialty Pharmaceuticals business in the first quarter of 2021, we released $127 million of cumulative translation adjustments associated with the disposed business from Accumulated other comprehensive income (loss), net of tax.

(in millions)	Foreign Currency Translation Adjustments		Net Change in Derivative Financial Instruments		Net Change in Defined Benefit Pensions and Other Items		Total
Balance as of December 31, 2019	$	142	$	173	$	(45)	$	270
Other comprehensive income (loss) before reclassifications	(172)		92		—		(80)
(Income) loss amounts reclassified from accumulated other comprehensive income	(5)		(17)		—		(21)
Total other comprehensive income (loss)	(177)		75		—		(101)
Balance as of March 31, 2020	$	(35)	$	248	$	(45)	$	168

Refer to Note D – Hedging Activities and Fair Value Measurements for further detail on our net investment hedges recorded in Foreign currency translation adjustments and our cash flow hedges recorded in Net change in derivative financial instruments.

The gains and losses on defined benefit and pension items before reclassifications and gains and losses on defined benefit and pension items reclassified from Accumulated other comprehensive income (loss), net of tax were reduced by immaterial income tax impacts in the first quarter 2021 and 2020.

33

NOTE N – NEW ACCOUNTING PRONOUNCEMENTS

Periodically, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our accompanying unaudited consolidated financial statements. During the first quarter of 2021, we implemented the following standards, which did not have a material impact on our financial position and results of operations.

Accounting Standards Implemented Since December 31, 2020

ASC Update No. 2020-10

In October 2020, the FASB issued ASC Update No. 2020-10, Codification Improvements. Update No. 2020-10 amends a wide variety of Topics in the Codification in order to improve the consistency of the Codification and the application thereof, while leaving Generally Accepted Accounting Principles unchanged.

ASC Update No. 2020-06

In August 2020, the FASB issued ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in Update No. 2020-06 simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.

ASC Update No. 2019-12

In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The purpose of Update No. 2019-12 is to continue the FASB’s Simplification Initiative to reduce complexity in accounting standards. The amendments in Update No. 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the incremental approach for intraperiod tax allocation, the requirement to recognize or derecognize deferred tax liabilities related to equity method investments that are also foreign subsidiaries, and the methodology for calculating income taxes in an interim period. In addition to removing these exceptions, Update No. 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes.

No other new accounting pronouncements issued or effective in the period had or are expected to have a material impact on our accompanying unaudited consolidated financial statements.

34

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Boston Scientific Corporation is a global developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. Our products and technologies are used to diagnose or treat a wide range of medical conditions, including cardiovascular, digestive, respiratory, urological, pelvic health, neurological conditions and certain types of cancer. We continue to innovate in these areas and are committed to the goal of extending our innovations into new geographies and high-growth, adjacent markets. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries.

COVID-19 Pandemic

In December 2019, the novel strain of coronavirus (SARS-Cov-2), and its disease commonly known as COVID-19 (COVID-19), was reported in China and has since widely impacted the global public health and economic environment. In March 2020, the World Health Organization (WHO) declared COVID-19, including all additional variations and strains thereof, a global pandemic (COVID-19 pandemic). While the majority of procedures using our products are deferrable, most of the conditions that we treat are generally fairly acute and cannot be deferred for extended periods. As the pandemic spread worldwide and with COVID-19 cases confirmed in all major geographies, many elective and semi-emergent procedures were postponed, enabling hospital staff to focus critical resources on caring for COVID-19 patients.

The ongoing COVID-19 pandemic and accompanying restrictions negatively impacted our net sales and our results of operations beginning in March 2020. We experienced some improvement in our global sales trends in the second half of 2020 which continued into the first quarter of 2021, as previously deferred procedures resumed and referral rates improved. As COVID-19 cases re-surged in many locations around the world and new, more contagious variant strains of COVID-19 emerged in late 2020, renewed restrictions were implemented in areas that had previously reopened, including in parts of Europe and the U.S. These restrictions continued to negatively impact our net sales in certain geographies in the first quarter of 2021. The U.S. Food and Drug Administration (FDA) issued emergency use authorizations for multiple COVID-19 vaccines, and regulatory bodies in other geographies around the world have also authorized COVID-19 vaccines for use. The timing and success of efforts to distribute and administer these vaccines to broad portions of the population, enabling widespread immunity to COVID-19, will impact the duration and extent of the pandemic and its effect on demand for our products.

Because the severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain and rapidly changing, the pandemic’s impact on our operations and financial performance, as well as its impact on our ability to execute our business strategies and initiatives successfully, remains uncertain and difficult to predict. Procedural delays from the further resurgence of COVID-19 infections and the emergence of new, more contagious variant strains of COVID-19 may negatively impact demand for our products, net sales, gross profit margin and operating expenses as a percentage of net sales in 2021.

We continue to focus our efforts on the health and safety of patients, healthcare providers and employees, while executing our mission of transforming lives through innovative medical solutions to improve the health of patients around the world. Since the onset of the COVID-19 pandemic, our global crisis management team has focused on protecting our employees and customers, optimizing our operations and securing our supply chain. We have successfully implemented business continuity plans including establishing a medical advisory group for employees, leveraging work from home infrastructure to facilitate social distancing, limiting sales visits to critical cases and accelerating capabilities to provide remote physician support. While we expect the COVID-19 pandemic will continue to negatively impact our 2021 performance to an extent, we continue to believe our long-term fundamentals remain strong and we will manage through these challenges with strategic focus and the winning spirit of our global team.

Corporate Sustainability

Our sustainable economic, environmental and social practices underpin all aspects of our global business. Our approach is aligned with the United Nations Sustainable Development Goals and our material topics and practices are informed by a broad range of internal and external stakeholders – locally, nationally and globally. Our employees around the world work with suppliers and other organizations that share our commitment to these practices that help address issues related to health inequity, economic disparity, climate change and environmental protection. These efforts are supported by our cross-functional Corporate Social Responsibility Council, our Environmental Health and Safety teams and policies, our Global Council for

35

Inclusion, as well as local, regional and national employee and community programs. Key examples of our programs include setting measurable, transparent diversity, equity and inclusion (DE&I) goals. Our “3UP by 2023” initiative furthers our focus on increasing the representation of women and multicultural talent at the supervisor and manager level by three percentage points or more by December 31, 2022. Our DE&I progress was recognized in the first quarter of 2021 when we were ranked in the Top 10 America's Best Employers for Diversity by Forbes. We are also proactively addressing ways to minimize energy consumption, carbon emissions, waste management and water use. We are focused on a “C3” strategy: Cutting energy use, Converting to renewable energy sources and Compensating with carbon offset projects where needed. We are on track with our commitment to carbon neutrality in our manufacturing and key distribution sites by 2030, and expect to source or generate 100 percent of electricity from renewable sources by 2024, and have already achieved our interim goal of 50 percent by 2021.

36

Financial Summary

Three Months Ended March 31, 2021

Our net sales for the first quarter of 2021 were $2.752 billion, as compared to $2.543 billion for the first quarter of 2020. This increase of $209 million, or 8.2 percent, included operational net sales growth of 5.6 percent and the positive impact of 260 basis points from foreign currency fluctuations, and includes net sales from the acquisition of Preventice Solutions, Inc. (Preventice) following the completion of the acquisition on March 1, 2021.1 Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net income available to common stockholders for the first quarter of 2021 was $327 million, or $0.23 per diluted share. Our reported results for the first quarter of 2021 included certain charges and/or credits totaling $197 million (after-tax), or $0.14 per diluted share. Excluding these items, adjusted net income available to common stockholders for the first quarter of 2021 was $524 million, or $0.37 per diluted share.1, 2

Our reported net income for the first quarter of 2020 was $11 million, or $0.01 per diluted share. Our reported results for the first quarter of 2020 included certain charges and/or credits totaling $380 million (after-tax), or $0.27 per diluted share. Excluding these items, adjusted net income for the first quarter of 2020 was $391 million, or $0.28 per diluted share.1

1Operational net sales growth rates, which exclude the impact of foreign currency fluctuations, and other adjusted measures, which exclude certain items required by generally accepted accounting principles in the United States (U.S. GAAP); are not prepared in accordance with U.S. GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP measure. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

2In May 2020, we completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock, Series A (MCPS) at a price to the public and liquidation preference of $100 per share. Refer to the reconciliations below for the impact of the MCPS cumulative preferred stock dividends on our calculations of earnings per share (EPS).

37

The following is a reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview and Additional Information for a discussion of these reconciling items:

	Three Months Ended March 31, 2021
(in millions, except per share data)	Earnings		Impact per Share(3)
Reported Net income (loss)	$	341
Reported Preferred stock dividends	(14)
Reported Net income (loss) available to common stockholders	$	327	$	0.23
Non-GAAP adjustments:
Amortization expense	167		0.12
Acquisition/divestiture-related net charges (credits)	(153)		(0.11)
Restructuring and restructuring-related net charges (credits)	44		0.03
Litigation-related net charges (credits)	4		0.00
Investment portfolio net losses (gains)	112		0.08
European Union (EU) Medical device regulation (MDR) implementation costs	10		0.01
Deferred tax expenses (benefits)	17		0.01
Discrete tax items	(3)		(0.00)
Adjusted net income (loss) available to common stockholders	$	524	$	0.37

(3) For the first quarter of 2021, the effect of assuming the conversion of MCPS into shares of common stock was anti-dilutive, and therefore excluded from the calculation of EPS. Accordingly, GAAP Net income and Adjusted net income were reduced by cumulative Preferred stock dividends, as presented in our unaudited consolidated statements of operations, for purposes of calculating GAAP Net income available to common stockholders.

	Three Months Ended March 31, 2020
(in millions, except per share data)	Earnings		Impact per Share
Reported Net income (loss)	$	11	$	0.01
Non-GAAP adjustments:
Amortization expense	180		0.13
Intangible asset impairment charges	168		0.12
Acquisition/divestiture-related net charges (credits)	(36)		(0.03)
Restructuring and restructuring-related net charges (credits)	25		0.02
EU MDR implementation costs	5		0.00
Deferred tax expenses (benefits)	26		0.02
Discrete tax items	13		0.01
Adjusted net income (loss)	$	391	$	0.28

Cash provided by operating activities was $284 million for the first quarter of 2021. As of March 31, 2021, we had total debt outstanding of $9.095 billion net of unamortized debt issuance discounts and deferred financing costs, Cash and cash equivalents of $2.016 billion and working capital of $2.708 billion. Refer to Liquidity and Capital Resources for further discussion.

38

Quarterly Results and Business Overview

The following section describes our net sales and results of operations by reportable segment and business unit. For additional information on our businesses and their product offerings, see Item 1. Business of our most recent Annual Report on Form 10-K.

	Three Months Ended March 31,
(in millions)	2021		2020		Change
Endoscopy	$	499	$	442	12.9%
Urology and Pelvic Health	361		332		8.7%
MedSurg	860		774		11.1%
Cardiac Rhythm Management	469		437		7.4%
Electrophysiology	83		74		11.9%
Neuromodulation	198		191		3.5%
Rhythm and Neuro	750		703		6.8%
Interventional Cardiology	696		633		9.9%
Peripheral Interventions	433		392		10.3%
Cardiovascular	1,129		1,026		10.0%
Medical Devices	2,739		2,502		9.5%
Specialty Pharmaceuticals(4)	13		41		(67.5)%
Net Sales	$	2,752	$	2,543	8.2%

(4) On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales include Specialty Pharmaceuticals up to the date of the closing of the transaction.

MedSurg

Endoscopy

Our Endoscopy business develops and manufactures devices to diagnose and treat a broad range of gastrointestinal (GI) and pulmonary conditions with innovative, less-invasive technologies. Our net sales of Endoscopy products for the first quarter of 2021 were $499 million or 18 percent of our consolidated net sales. Our Endoscopy net sales increased $57 million, or 12.9 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 9.9 percent and a positive impact of 300 basis points from foreign currency fluctuations, compared to the prior year period. This growth was primarily driven by our biliary, single-use imaging, hemostasis and infection prevention franchises due to the resumption of elective and semi-emergent procedures deferred in the COVID-19 pandemic environment.

Urology and Pelvic Health

Our Urology and Pelvic Health business develops and manufactures devices to treat various urological and pelvic conditions for both male and female anatomies. Our net sales of Urology and Pelvic Health products for the first quarter of 2021 were $361 million or 13 percent of our consolidated net sales. Our Urology and Pelvic Health net sales increased $29 million, or 8.7 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 6.8 percent and a positive impact of 190 basis points from foreign currency fluctuations, compared to the prior year period. This growth was driven by our stone management and prostate health franchises in addition to the resumption of elective and semi-emergent procedures deferred in the COVID-19 pandemic environment. Operational net sales growth included organic net sales growth of 8.8 percent and the negative impact of 200 basis points from the divestiture of the Intrauterine Health business in the second quarter of 2020.

Rhythm and Neuro

Cardiac Rhythm Management

Our Cardiac Rhythm Management (CRM) business develops and manufactures a variety of implantable devices that monitor the heart and deliver electricity to treat cardiac abnormalities. Our net sales of CRM products for the first quarter of 2021 were

39

$469 million or 17 percent of our consolidated net sales. Our CRM net sales increased $32 million, or 7.4 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 4.4 percent and a positive impact of 290 basis points from foreign currency fluctuations, compared to the prior year period. This growth was driven primarily by the acquisition of Preventice on March 1, 2021, adding to our CRM business a full portfolio of mobile cardiac health solutions and services, ranging from ambulatory cardiac monitors, to cardiac event monitors and mobile cardiac telemetry. Operational net sales growth included organic net sales growth of 0.5 percent and the positive impact of 390 basis points from the Preventice acquisition. Organic net sales growth was attributable to our defibrillator and pacemaker franchises, which experienced modest growth due to the resumption of semi-emergent and emergent procedures deferred in the COVID-19 pandemic environment, as well as our cardiac diagnostics franchise, led by our LUX-Dx™ Insertable Cardiac Monitor (ICM) system.

Electrophysiology

Our Electrophysiology business develops and manufactures less-invasive medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart. Our net sales of Electrophysiology products for the first quarter of 2021 were $83 million or 3 percent of our consolidated net sales. Our Electrophysiology net sales increased $9 million, or 11.9 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 7.7 percent and a positive impact of 420 basis points from foreign currency fluctuations, compared to the prior year period. This growth was driven by the resumption of elective procedures significantly impacted by deferrals in the COVID-19 pandemic environment and the success of our POLARx™ Cryoablation System launch in Europe.

Neuromodulation

Our Neuromodulation business develops and manufactures devices to treat various neurological movement disorders and manage chronic pain. Our net sales of Neuromodulation products for the first quarter of 2021 were $198 million or 7 percent of our consolidated net sales. Our Neuromodulation net sales increased $7 million, or 3.5 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 1.7 percent and a positive impact of 180 basis points from foreign currency fluctuations, compared to the prior year period. This growth was primarily driven by our spinal cord stimulation (SCS) systems, led by our next generation WaveWriter Alpha™ SCS System and deep brain stimulation (DBS) systems, including our Vercise Genus™ DBS System in Europe, due to the resumption of elective procedures deferred in the COVID-19 pandemic environment.

Cardiovascular

Interventional Cardiology

Our Interventional Cardiology business develops and manufactures technologies for diagnosing and treating coronary artery disease and structural heart conditions. Our net sales of Interventional Cardiology products for the first quarter of 2021 were $696 million or 25 percent of our consolidated net sales. Our Interventional Cardiology net sales increased $62 million, or 9.9 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 7.1 percent and a positive impact of 270 basis points from foreign currency fluctuations, compared to the prior year period. This growth was driven by our WATCHMAN™ FLX Left Atrial Appendage Closure Device as well as our percutaneous coronary intervention guidance (PCIG) franchise, due to the resumption of procedures deferred in the COVID-19 pandemic environment. These increases were partially offset by the discontinuation of our LOTUS Edge™ Aortic Valve System in the fourth quarter of 2020 and a decline in net sales of our drug-eluting stent systems and balloon catheters driven by China tender pricing and general price declines in other regions.

40

Peripheral Interventions

Our Peripheral Interventions business develops and manufactures products to diagnose and treat peripheral arterial and venous diseases, as well as products to diagnose, treat and ease various forms of cancer. Our net sales of Peripheral Interventions products for the first quarter of 2021 were $433 million or 16 percent of our consolidated net sales. Our Peripheral Interventions net sales increased $41 million, or 10.3 percent, in the first quarter of 2021, compared to the prior year period. In the first quarter of 2021, this increase included operational net sales growth of 7.7 percent and a positive impact of 260 basis points from foreign currency fluctuations, compared to the prior year period. This growth was primarily driven by the Interventional Oncology franchise, including our TheraSphere™ Y-90 Radioactive Glass Microspheres, which received U.S. Food and Drug Administration (FDA) approval in the first quarter of 2021 after 20 years as a humanitarian device exemption (HDE), as well as growth in our drug-eluting portfolio, including the Eluvia™ Drug-Eluting Stent and Ranger™ Drug-Coated Balloon due to the resumption of procedures deferred in the COVID-19 pandemic environment. In the first quarter of 2021, we received approval from Japan’s Ministry of Health, Labor and Welfare (MHLW) for our Ranger Drug-Coated Balloon and initiated a full launch.

Specialty Pharmaceuticals

On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business for a purchase price of approximately $800 million. Our consolidated net sales include Specialty Pharmaceuticals up to the date of the closing of the transaction.

Emerging Markets

As part of our strategic imperative to drive global expansion, we are seeking to grow net sales and market share by expanding our global presence, including in Emerging Markets. We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess our list of Emerging Markets countries, and effective January 1, 2021, modified our list to include the following countries: Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Taiwan, Thailand, Turkey and Vietnam. We have revised prior year amounts to conform to the current year's presentation. The revision had an immaterial impact on previously reported Emerging Markets net sales. Our Emerging Markets net sales represented 12 percent of our consolidated net sales in the first quarter of 2021 and 11 percent in the first quarter of 2020. In the first quarter of 2021, our Emerging Markets net sales grew 16.0 percent on a reported basis, which included operational net sales growth of 13.2 percent and a positive impact of 280 basis points from foreign currency fluctuations, compared to the prior year period. The growth in the first quarter of 2021 was largely driven by our net sales in China, which have largely recovered from the impact of the COVID-19 pandemic on procedural volumes.

Gross Profit

Our Gross profit was $1.858 billion for the first quarter of 2021 and $1.737 billion for the first quarter of 2020. As a percentage of net sales, our Gross profit decreased to 67.5 percent in the first quarter of 2021, as compared to 68.3 percent in the first quarter of 2020. The following is a reconciliation of our gross profit margin and a description of the drivers of the changes from period to period:

	Percentage of Net Sales
	Three Months
Gross profit margin - period ended March 31, 2020	68.3%
Manufacturing cost reductions	0.7
Sales pricing, volume and mix	(1.3)
Net impact of foreign currency fluctuations	(0.7)
All other, including other expenses	0.5
Gross profit margin - period ended March 31, 2021	67.5%

The primary factors contributing to the slight decrease in our gross profit margin in the first quarter of 2021, as compared to the same period in 2020, were negative manufacturing variances attributable to lower production volumes due to the COVID-19 pandemic, unfavorable product mix due to the lingering impact of procedure deferrals using higher-margin products, price declines related primarily to sales of our coronary drug-eluting stent systems and foreign currency fluctuations. These decreases were partially offset by manufacturing cost reductions driven by our process improvement programs.

41

Operating Expenses

The following table provides a summary of certain of our operating expenses:

	Three Months Ended March 31,
	2021				2020
(in millions)	$		% of Net Sales		$		% of Net Sales
Selling, general and administrative (SG&A) expenses	$	1,019	37.0	%	$	978	38.5	%
Research and development (R&D) expenses	276		10.0	%	300		11.8	%
Royalty expense	12		0.4	%	12		0.5	%

SG&A Expenses

In the first quarter of 2021, our SG&A expenses increased $41 million, or 4 percent, as compared to the first quarter of 2020 and were 150 basis points lower as a percentage of net sales. The increase in SG&A expenses for the first quarter of 2021, as compared to the same period in the prior year, was primarily due to higher restructuring-related and acquisition-related spend.

R&D Expenses

We remain committed to advancing medical technologies and investing in meaningful R&D projects across our businesses. In the first quarter of 2021, our R&D expenses decreased $24 million, or 8 percent, as compared to the first quarter of 2020 and were 180 basis points lower as a percentage of net sales. We expect to continue to make investments across our businesses in order to maintain a pipeline of new products that we believe will contribute to profitable sales growth.

Royalty Expense

In the first quarter of 2021, our Royalty expense remained relatively flat, as compared to the first quarter of 2020 and decreased as a percentage of net sales primarily due to global net sales growth in the first quarter of 2021 as compared to the first quarter of 2020.

Other Operating Expenses

The following table provides a summary of certain of our other operating expenses, which are excluded by management for purposes of evaluating operating performance, refer to Additional Information for a further description of certain operating expenses:

	Three Months Ended March 31,
(in millions)	2021		2020
Amortization expense	$	185	$	201
Intangible asset impairment charges	—		198
Contingent consideration net expense (benefit)	(6)		(108)
Restructuring charges (credits)	5		10
Litigation-related net charges (credits)	4		—

Amortization Expense

In the first quarter of 2021, our Amortization expense decreased $16 million, or 8 percent, as compared to first quarter of 2020. The decrease in Amortization expense in the first quarter of 2021, as compared to the same period in the prior year, was driven by a decrease in the balance of amortizable intangible assets due to the divestiture of the Specialty Pharmaceuticals business.

Intangible Asset Impairment Charges

We recorded Intangible asset impairment charges of $198 million in the first quarter of 2020. The impairment charges recorded in the first quarter of 2020 were primarily associated with amortizable technology-related intangible assets that were initially

42

established following our acquisition of nVision Medical Corporation (nVision). These charges were recorded as a result of management’s decision to change commercial launch plans or discontinue certain R&D programs based on cost to complete, time to market, overall economic viability or, specific to nVision, our understanding of the clinical evidence necessary to commercialize the technology. Refer to Note C – Goodwill and Other Intangible Assets to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and Critical Accounting Estimates in Item 7 of our most recent Annual Report on Form 10-K for additional details for a discussion of key assumptions used in our goodwill and intangible asset impairment testing and future events that could have a negative impact on the recoverability of our goodwill and intangible assets.

Contingent Consideration Net Expense (Benefit)

To recognize changes in the fair value of our contingent consideration liability, we recorded net benefits in the first quarter of 2021 and 2020. The net benefits recorded in the first quarter of 2021 and 2020 related to a reduction in the contingent consideration liability for certain prior acquisitions for which we reduced the probability of achievement of associated revenue and/or regulatory milestones upon which payment is conditioned, or, in the case of nVision, for milestones that would not be achieved due to management's discontinuation of the R&D program. In addition, we made payments of $11 million associated with prior acquisitions during the first quarter of 2021, following the achievement of a revenue-based milestone. Refer to Note B – Acquisitions, Divestitures and Strategic Investments to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our contingent consideration arrangements.

Restructuring Charges (Credits)

In November 2018, our Board of Directors approved, and we committed to, a new global restructuring program (the 2019 Restructuring Plan). The 2019 Restructuring Plan, for which our Board of Directors approved an extension and expansion in February 2021, is expected to result in total pre-tax charges of approximately $375 million to $475 million and approximately $340 million to $440 million of these charges are expected to result in cash outlays. We expect the majority of activity associated with our 2019 Restructuring Plan, including the extension, to be substantially complete by the end of 2022. A substantial portion of the savings are being reinvested in strategic growth initiatives. Pursuant to this program, restructuring charges were $3 million in the first quarter of 2021 and $10 million in the first quarter of 2020. Restructuring-related charges were $29 million in the first quarter of 2021 and $20 million in the first quarter of 2020 and were recorded primarily in Cost of products sold and SG&A expenses.

In addition, on November 17, 2020, we announced a global, voluntary recall of all unused inventory of our LOTUS Edge™ Aortic Valve System, and our decision to retire the entire LOTUS™ Valve platform. We recorded $2 million of restructuring charges and $15 million of restructuring-related charges associated with the product discontinuation in the first quarter of 2021. We estimate the decision will result in total pre-tax restructuring and restructuring-related net charges of approximately $80 million to $85 million. We substantially completed the restructuring activities in the first quarter of 2021, with minimal future charges and cash outlays expected for the remainder of the year.

Refer to Note H – Restructuring-related Activities to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

Litigation-related net charges (credits)

We recorded litigation-related net charges of $4 million during the first quarter of 2021, related to the finalization of a settlement with a coalition of state attorneys general associated with claims regarding our transvaginal surgical mesh products. We did not record any litigation-related net charges during the first quarter of 2020. We record certain legal and product liability charges, credits and costs of defense, which we consider to be unusual or infrequent and significant as Litigation-related net charges (credits) in our accompanying unaudited consolidated financial statements. All other legal and product liability charges, credits and costs are recorded within SG&A expenses.

We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation, and therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with the financial covenant required by our credit arrangements. Refer to Note H – Commitments and Contingencies to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

43

Interest Expense

The following table provides a summary of our Interest expense and average borrowing rate:

	Three Months Ended March 31,
	2021			2020
Interest expense (in millions)	$	(82)		$	(88)
Average borrowing rate	3.5		%	3.4		%

Interest expense and our average borrowing rate remained relatively flat in the first quarter of 2021, as compared to the same period in the prior year. We began to take proactive steps to manage the potential impact of the COVID-19 pandemic on our short-term liquidity and refinanced existing term loans and outstanding commercial paper with proceeds from new term loans and our Revolving Credit Facility in the first half of 2020. We refinanced this short-term, variable-rate debt in May 2020 with our issuances of $500 million 1.900% senior notes due June 2025 and $1.200 billion 2.650% senior notes due June 2030. Refer to Liquidity and Capital Resources and Note E – Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our debt obligations.

Other, net

The following are the components of Other, net:

	Three Months Ended March 31,
(in millions)	2021		2020
Interest income	$	1	$	1
Net foreign currency gain (loss)	(2)		(7)
Net gains (losses) on investments	37		(22)
Other income (expense), net	2		(8)
	$	37	$	(36)

In connection with the acquisition of Preventice in the first quarter of 2021, we remeasured the fair value of our previously-held equity interest, which resulted in a $195 million gain recognized within Other, net in the first quarter of 2021. In the first quarter of 2021, we recorded a $146 million loss on our investment in Pulmonx Corporation presented in Other, net associated with the partial disposition of our ownership and remeasurement of our remaining investment to fair value based on observable market prices. The Preventice gain is included within Acquisition/divestiture-related net charges (credits) and the Pulmonx loss is included in Investment portfolio net losses (gains) presented in the reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Financial Summary for the reconciliation and Additional Information for a discussion of management's use of non-GAAP financial measures.

Tax Rates

Our effective tax rate from continuing operations is presented below:

	Three Months Ended March 31,
	2021		2020
Effective tax rate from continuing operations	(4.9)	%	52.3	%

The change in our reported tax rates for the first quarter of 2021, as compared to the same period in 2020, relates primarily to a shift in geographical mix of earnings to lower-tax jurisdictions, and the impact of certain receipts and charges that are taxed at different rates than our effective tax rate. These receipts and charges include acquisition/divestiture-related net gains, as well as certain discrete tax items primarily related to changes to unrecognized tax benefits, and foreign return-to-provision adjustments, foreign audit settlements and expenses associated with recent acquisitions.

Economic stimulus legislation has been enacted in many countries in response to the COVID-19 pandemic. In the U.S., the Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted on March 27, 2020, provided an estimated $2.2 trillion in COVID-19 pandemic-related relief, and included tax relief and government loans, subsidies and other relief for entities in

44

affected industries. While we have not applied for government loans, we have taken advantage of the benefits offered in multiple jurisdictions, including the U.S. provision allowing taxpayers to defer payment of the employer portion of certain payroll taxes incurred in 2020. This allowed us to preserve cash generated from operations to service our debt obligations and other near-term commitments, and is expected to be paid in full by the end of 2022 as permitted by the legislation.

Critical Accounting Policies and Estimates

Our financial results are affected by the selection and application of accounting policies and methods. In the first quarter of 2021, there were no changes to the application of critical accounting policies previously disclosed in our most recent Annual Report on Form 10-K.

Liquidity and Capital Resources

Due to the uncertainty of the impact of the COVID-19 pandemic on our business, we took proactive steps in 2020 to reduce costs and ensure we are in a strong position to support customers and patients as healthcare systems recover and elective and semi-emergent procedures resume. These actions included taking steps to manage outstanding borrowings and increase available liquidity, and preemptively amending our financial covenant requirement for our outstanding credit arrangements.

Based on our current business plan, we believe our existing balance of Cash and cash equivalents, future cash generated from operations, access to capital markets and existing credit facilities will be sufficient to fund our operations, invest in our infrastructure, pay our legal-related liabilities, pay taxes due and service and repay our existing debt for at least the next 12 months. Please refer to Contractual Obligations and Commitments below for additional details on our future payment obligations and commitments.

As of March 31, 2021, we had $2.016 billion of unrestricted Cash and cash equivalents on hand, comprised of $1.759 billion invested in money market funds and time deposits and $257 million in interest bearing and non-interest-bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn at market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer. As of March 31, 2021, we had no commercial paper debt outstanding, resulting in an additional $2.750 billion of available liquidity.

For additional details related to our debt obligations, including our financial covenant requirement, refer to Note E – Contractual Obligations and Commitments to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

The following provides a summary and description of our net cash inflows (outflows):

	Three Months Ended March 31,
(in millions)	2021		2020
Cash provided by (used for) operating activities	$	284	$	(77)
Cash provided by (used for) investing activities	71		(76)
Cash provided by (used for) financing activities	(95)		256

Operating Activities

In the first quarter of 2021, cash provided by operating activities increased $361 million as compared to the first quarter of 2020. The increase was primarily due to comparatively higher net sales, as well as a settlement payment related to litigation with Channel Medsystems, Inc. in the first quarter of 2020.

Investing Activities

In the first quarter of 2021, cash provided by investing activities included proceeds of $801 million from the divestiture of the Specialty Pharmaceuticals business, partially offset by a net cash payment of $706 million for the acquisition of Preventice. For more information, refer to Note B – Acquisitions, Divestitures and Strategic Investments to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q. In addition, we made purchases of property, plant and equipment of $75 million in the first quarter of 2021 and $100 million in the first quarter of 2020.

45

Financing Activities

In the first quarter of 2021, cash used for financing activities primarily included cash payments associated with the settlement of employee equity awards and payments for royalty rights associated with the Zytiga™ Drug.

In the first quarter of 2020, we refinanced our existing term loans and outstanding commercial paper with proceeds from a new term loan and our Revolving Credit Facility. On February 27, 2020, we entered into a $1.000 billion term loan credit agreement scheduled to mature on February 25, 2021 (February 2021 Term Loan) and used the proceeds to repay the remaining amounts outstanding on our Three-Year Delayed Draw Term Loan entered into for the purpose of funding our acquisition of BTG plc in 2019. In addition, we began to take proactive steps to manage the potential impact of the emerging COVID-19 pandemic on our short-term liquidity, using proceeds from our commercial paper program to repay a portion of the outstanding balance on our December 2020 Term Loan and subsequently repaid all outstanding commercial paper using partial proceeds from our Revolving Credit Facility.

Please refer to Note F – Contractual Obligations and Commitments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information regarding additional financing activities for the year ended December 31, 2020, including the full repayment of amounts outstanding under our Revolving Credit Facility and February 2021 Term Loan.

Financial Covenant

As of and through March 31, 2021, we were in compliance with the financial covenant required by all existing credit facilities.

On April 21, 2020, we entered into an agreement with our banking syndicates to amend the financial covenant requirement for all of our outstanding credit arrangements as follows: (i) established a deemed Consolidated EBITDA of $671 million for the second, third and fourth quarters of 2020, reflecting average quarterly Consolidated EBITDA, as defined in the credit agreements, for 2018 and 2019; and (ii) maintain the maximum permitted leverage ratio of 4.75 times through the remainder of 2020, with a step-down for each succeeding fiscal quarter end, beginning with the first quarter of 2021, to 4.50 times, 4.25 times, 4.00 times and ultimately 3.75 times for the fourth quarter of 2021 and through the remaining term of the facility. We believe that we have the ability to comply with the amended covenant requirement for the next 12 months.

Contractual Obligations and Commitments

Certain of our acquisitions involve the payment of contingent consideration. See Note B – Acquisitions, Divestitures and Strategic Investments to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as reported in our most recent Annual Report filed on Form 10-K.

Equity

On May 27, 2020, we completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock, Series A (MCPS) at a price to the public and liquidation preference of $100 per share. The net proceeds from the MCPS offering were approximately $975 million after deducting underwriting discounts and commissions and offering expenses. On May 27, 2020, we also completed an offering of 29,382,500 shares of common stock at a public offering price of $34.25 per share. The net proceeds from the common stock offering were approximately $975 million after deducting underwriting discounts and commissions and offering expenses.

We received $18 million in the first quarter of 2021 and $42 million in the first quarter of 2020 in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of our employees.

We did not repurchase any shares of our common stock in the first quarter of 2021 or 2020. On December 14, 2020, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $1.000 billion of our common stock. As of March 31, 2021, we had the full amount remaining available under the authorization.

46

Legal Matters

For a discussion of our material legal proceedings see Note H – Commitments and Contingencies to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and Note K – Commitments and Contingencies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements implemented since December 31, 2020 is included in Note A – Basis of Presentation and information regarding new accounting pronouncements to be implemented is included in Note N – New Accounting Pronouncements to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Additional Information

Cybersecurity

We have established controls and procedures to escalate enterprise level issues, including cybersecurity matters, to the appropriate management levels within our organization and our Board of Directors, or members or committees thereof, as appropriate. Under our framework, cybersecurity issues are analyzed by subject matter experts and a crisis committee for potential financial, operational, and reputational risks, based on, among other factors, the nature of the matter and breadth of impact. Matters determined to present potential material impacts to the Company’s financial results, operations, and/or reputation are immediately reported by management to the Board of Directors, or individual members or committees thereof, as appropriate, in accordance with our escalation framework. In addition, we have established procedures to ensure that management responsible for overseeing the effectiveness of disclosure controls is informed in a timely manner of known cybersecurity risks and incidents that may materially impact our operations and that timely public disclosure is made as appropriate. 

Stock Trading Policy

Our directors and executive officers are subject to our Stock Trading Policy, which is designed to facilitate compliance with insider trading laws and governs transactions in our common stock and related derivative securities. Our policy designates certain regular periods, dictated by release of financial results, in which trading is restricted for individuals in information-sensitive positions, including directors and executive officers. In addition, additional periods of trading restriction may be imposed as determined by the President, General Counsel, or Chief Financial Officer in light of material pending developments. Further, during permitted windows, individuals in information-sensitive positions are required to seek pre-clearance for trades from the General Counsel, who assesses whether there are any important pending developments, including cybersecurity matters, which need to be made public before the individual may participate in the market.

Periodically, certain of our executive officers adopt written stock trading plans in accordance with Rule 10b5-1 under the Exchange Act and our own Stock Trading Policy. A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amount, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of our stock, including shares issued upon exercise of stock options or vesting of deferred stock units. These plans are entered into at a time when the person is not in possession of material non-public information about the Company. We disclose details regarding individual Rule 10b5-1 Trading Plans on the Investor Relations section of our website.

47

Use of Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (loss), adjusted net income (loss) available to common stockholders and adjusted net income (loss) per share (EPS) that exclude certain amounts, operational net sales, which exclude the impact of foreign currency fluctuations and organic net sales, which exclude the impact of foreign currency fluctuations and the impact of recent aforementioned acquisitions and divestitures. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

To calculate adjusted net income (loss), adjusted net income (loss) available to common stockholders and adjusted net income (loss) per share we exclude certain charges (credits) from GAAP net income and GAAP net income available to common stockholders. Amounts are presented after-tax using our effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB ASC section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate." Please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report filed on Form 10-K filed with the Securities and Exchange Commission (SEC) for an explanation of each of these adjustments and the reasons for excluding each item.

The GAAP financial measures most directly comparable to adjusted net income (loss), adjusted net income (loss) available to common stockholders and adjusted net income (loss) per share are GAAP net income (loss), GAAP net income (loss) available to common stockholders and GAAP net income (loss) per common share - assuming dilution, respectively.

To calculate operational net sales growth rates, which exclude the impact of foreign currency fluctuations, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior periods. To calculate organic net sales growth rates, we also remove the impact of recent aforementioned acquisitions and divestitures with less than a full period of comparable net sales. The GAAP financial measure most directly comparable to operational net sales and organic net sales is net sales on a GAAP basis.

Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included in the relevant sections of this Quarterly Report.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments’ measures of net sales and profit or loss. These adjustments are excluded from the segment measures reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income (loss), adjusted net income (loss) available to common stockholders, adjusted net income (loss) per share, operational net sales and organic net sales, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its operational decision-making and allows investors to see our results “through the eyes” of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend,” “aim” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements.

48

The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K and the specific risk factors discussed herein and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this Quarterly Report. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Risks and uncertainties that may cause such differences include, among other things: the impact of the ongoing COVID-19 pandemic on our operations and financial results, future U.S. and global economic, political, competitive, reimbursement and regulatory conditions, new product introductions and the market acceptance of those products, markets for our products, expected pricing environment, expected procedural volumes, the closing and integration of acquisitions, clinical trial results, demographic trends, intellectual property rights, litigation, financial market conditions, the execution and effect of our restructuring program, the execution and effect of our business strategy, including our cost-savings and growth initiatives and future business decisions made by us and our competitors. New risks and uncertainties may arise from time to time and are difficult to predict, including those that have emerged or have increased in significance or likelihood as a result of the COVID-19 pandemic. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K filed with the SEC, which we may update in Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10-Q that we will file hereafter, and Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this Quarterly Report.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, see Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K and Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.

Our Businesses

•The impact of the COVID-19 pandemic on the worldwide economy and financial markets, and developments related to the disease, including the time it will take for vaccines to be broadly produced, distributed and administered in the U.S. and the rest of the world, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and mitigating the economic effects of the pandemic,

•The impact of the COVID-19 pandemic upon the scheduling of elective and semi-emergent procedures,

•The impact of the COVID-19 pandemic on our global manufacturing and distribution system, including the quality of our products,

•Our ability to recover from the impact of the COVID-19 pandemic on our business and increase net sales, expand the markets in which we participate, capture market share and adapt to market volatility,

•The impact of natural disasters, climate change, additional future public health crises and other catastrophic events on our ability to manufacture, distribute and sell our products,

•Competitive offerings and related declines in average selling prices for our products,

•The ongoing impact on our business of physician alignment to hospitals, governmental investigations and audits of hospitals and other market and economic conditions on the overall number of procedures performed,

•The performance of, and physician and patient confidence in, our products and technologies or those of our competitors,

•The impact and outcome of ongoing and future clinical trials and market studies undertaken by us, our competitors or other third parties or perceived product performance of our or our competitors' products,

49

•Variations in clinical results, reliability or product performance of our and our competitors' products,

•Our ability to acquire or develop, launch and supply new or next-generation products and technologies worldwide and in line with our commercialization strategies in a timely and successful manner and with respect to our recent acquisitions,

•The effect of consolidation and competition in the markets in which we do business or plan to do business,

•Disruption in the manufacture or supply of certain components, materials or products, or the failure to secure in a timely manner alternative manufacturing or additional or replacement components, materials or products,

•Our ability to achieve our projected level or mix of product sales, as some of our products are more profitable than others,

•Our ability to attract and retain key personnel, including those associated with recent acquisitions, and maintain our robust corporate culture, especially in light of the remote working conditions imposed by the COVID-19 pandemic,

•The inability of certain of our employees to return to work full time following reduced work schedules associated with the COVID-19 pandemic, or our inability to recruit personnel into direct labor roles for the duration of the pandemic,

•The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world, including EU MDR and the associated timing and cost of product approval,

•The impact of increased pressure on the availability and rate of third-party reimbursement for our products and procedures in the U.S. and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies,

•The issuance of new or revised accounting standards by the Financial Accounting Standards Board or the Securities and Exchange Commission, and

•The impact of potential goodwill and intangible asset impairment charges on our results of operations.

Regulatory Compliance, Litigation and Data Protection

•The impact of healthcare policy changes and legislative or regulatory efforts in the U.S., the EU and around the world to modify product approval or reimbursement processes, including a trend toward demonstrating clinical outcomes, comparative effectiveness and cost efficiency, as well as the impact of other healthcare reform legislation,

•Risks associated with our regulatory compliance and quality systems and activities in the U.S., the EU and around the world, including meeting regulatory standards applicable to manufacturing and quality processes,

•Our ability to minimize or avoid future field actions or FDA warning letters relating to our products and processes and the ongoing inherent risk of potential physician advisories related to our or our competitors' products,

•The impact of increased scrutiny of and heightened global regulatory enforcement facing the medical device industry arising from political and regulatory changes, economic pressures or otherwise, including under U.S. Anti-Kickback Statute, U.S. False Claims Act and similar laws in other jurisdictions, U.S. Foreign Corrupt Practices Act (FCPA) and similar laws in other jurisdictions, and U.S. and foreign export control, trade embargo and customs laws,

•Costs and risks associated with current and future asserted litigation,

•The effect of our litigation and risk management practices, including self-insurance and compliance activities on our loss contingencies, legal provision and cash flows,

•The impact of, diversion of management attention as a result of, and costs to cooperate with, litigate and/or resolve governmental investigations and our class action, product liability, contract and other legal proceedings,

•The possibility of failure to protect our intellectual property rights and the outcome of patent litigation,

50

•Our ability to operate properly our information systems that support our business operations and protect our data integrity and products from a cyber-attack or other breach that has a material adverse effect on our business, reputation or results of operations, and

•The potential impact to internal control over financial reporting relating to potential restrictions to access to consigned inventory at customer locations for our inventory count procedures.

Innovation and Certain Growth Initiatives

•The timing, size and nature of our strategic growth initiatives and market opportunities, including with respect to our internal research and development platforms and externally available research and development platforms and technologies and the ultimate cost and success of those initiatives and opportunities,

•Our ability to complete planned clinical trials successfully, obtain regulatory approvals and launch new and next generation products in a timely manner consistent with cost estimates, including the successful completion of projects from in-process research and development,

•Our ability to identify and prioritize our internal research and development project portfolio and our external investment portfolio on profitable net sales growth opportunities as well as to maintain the estimated timing and costs of such projects and expected revenue levels for the resulting products and technologies,

•Our ability to develop, manufacture and market new products and technologies successfully and in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete,

•Our ability to execute appropriate decisions to discontinue, write-down or reduce the funding of any of our research and development projects, including projects from in-process research and development from our acquisitions, in our growth adjacencies or otherwise,

•Our dependence on acquisitions, alliances or investments to introduce new products or technologies and to enter new or adjacent growth markets and our ability to fund them or to fund contingent payments with respect to those acquisitions, alliances and investments, and

•The potential failure to successfully integrate and realize the expected benefits, including cost synergies, from the strategic acquisitions, alliances and investments we have consummated or may consummate in the future.

International Markets

•Our dependency on international net sales to achieve growth, including in emerging markets,

•The timing and collectability of customer payments, as well as our ability to continue factoring customer receivables where we have factoring arrangements,

•The impact on pricing due to national tenders,

•Geopolitical and economic conditions, including civil unrest, terrorist activity, governmental changes, restrictions on the ability to transfer capital across borders, tariffs and other protectionist measures,

•The impact of the United Kingdom’s departure from the European Union,

•Protection of our intellectual property,

•Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including FCPA, EU MDR and similar laws in other jurisdictions,

•Our ability to comply with U.S. and foreign export control, trade embargo and customs laws,

•The impact of changes in reimbursement practices and policies,

51

•The impact of significant developments or uncertainties stemming from changes in the U.S. administration following the 2020 presidential and congressional elections, including changes in U.S. trade policies, tariffs and the reaction of other countries thereto, particularly China,

•Our ability to maintain or expand our worldwide market positions in the various markets in which we compete or seek to compete, including through investments in product diversification and emerging markets such as Brazil, Russia, India and China,

•Our ability to execute and realize anticipated benefits from our investments in emerging markets, and

•The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses and resulting margins.

Liquidity

•Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, any litigation settlements and judgments, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and financial covenant compliance, particularly in light of the COVID-19 pandemic and lower demand for our products,

•Our ability to access the public and private capital markets when desired and to issue debt or equity securities on terms reasonably acceptable to us,

•The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws,

•The unfavorable resolution of open litigation matters, exposure to additional loss contingencies and legal provisions,

•The impact of examinations and assessments by domestic and international taxing authorities on our tax provision, financial condition or results of operations,

•The possibility of counterparty default on our derivative financial instruments, and

•Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.

Cost Reduction and Optimization Initiatives

•Risks associated with changes made or expected to be made to our organizational and operational structure, pursuant to our restructuring plans as well as any further restructuring or optimization plans we may undertake in the future and our ability to recognize benefits and cost reductions from such programs and

•Business disruption and employee distraction as we execute our global compliance program, restructuring and optimization plans and divestitures of assets or businesses and implement our other strategic and cost reduction initiatives.

52

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in currency exchange rates and interest rates. We address these risks through a risk management program that includes the use of derivative financial instruments. We operate the program pursuant to documented corporate risk management policies. We do not enter derivative transactions for speculative purposes. Gains and losses on derivative financial instruments substantially offset losses and gains on underlying hedged exposures. Furthermore, we manage our exposure to counterparty risk on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.

Our currency risk consists primarily of foreign currency denominated firm commitments, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We use both nonderivative (primarily European manufacturing operations) and derivative instruments to manage our earnings and cash flow exposure to changes in currency exchange rates. We had currency derivative instruments outstanding in the contract amount of $11.041 billion as of March 31, 2021 and $10.481 billion as of December 31, 2020. A ten percent appreciation in the U.S. dollar’s value relative to the hedged currencies would increase the derivative instruments’ fair value by $373 million as of March 31, 2021 as compared to $333 million as of December 31, 2020. A ten percent depreciation in the U.S. dollar’s value relative to the hedged currencies would decrease the derivative instruments’ fair value by $456 million as of March 31, 2021 as compared to $407 million as of December 31, 2020. Any increase or decrease in the fair value of our currency exchange rate sensitive derivative instruments would be substantially offset by a corresponding decrease or increase in the fair value of the hedged underlying asset, liability or forecasted transaction, resulting in minimal impacts on our unaudited consolidated statements of operations.

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. We had no interest rate derivative instruments outstanding as of March 31, 2021 and December 31, 2020. As of March 31, 2021, $9.155 billion in aggregate principal amount of our outstanding debt obligations were at fixed interest rates, representing approximately 100 percent of our total debt, on an amortized cost basis. As of March 31, 2021, our outstanding debt obligations at fixed interest rates were comprised of senior notes.

Refer to Note D – Hedging Activities and Fair Value Measurements to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our derivative financial instruments.

53

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2021 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures are designed to ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such material information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation, our CEO and CFO concluded that, as of March 31, 2021, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting in the first quarter of 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Further, while many of our employees continued to work remotely to adhere to COVID-19 social distancing requirements, this did not affect our ability to maintain financial reporting systems, internal controls over financial reporting or disclosure controls and procedures. Prior to the COVID-19 pandemic, we were leveraging electronic tools to facilitate our global close process and to connect our physically dispersed team of finance professionals in offices around the world. While the quarterly close cycle was performed remotely, fundamentally, the work performed, and the processes and controls executed did not change.

54

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note G – Income Taxes and Note H – Commitments and Contingencies to our unaudited consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to other information contained elsewhere in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our most recent Annual Report filed on Form 10-K, which could materially affect our business, financial condition or future results.

ITEM 6. EXHIBITS (* documents filed or furnished with this report, # compensatory plans or arrangements)

31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

55

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on May 6, 2021.

BOSTON SCIENTIFIC CORPORATION
By:	/s/ Daniel J. Brennan
	Name:	Daniel J. Brennan
	Title:	Executive Vice President and Chief Financial Officer

56

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael F. Mahoney, certify that:

1	I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	May 6, 2021	/s/ Michael F. Mahoney
		Michael F. Mahoney
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Daniel J. Brennan, certify that:

1	I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
2	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	May 6, 2021	/s/ Daniel J. Brennan
		Daniel J. Brennan
		Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

By:	/s/ Michael F. Mahoney
	Michael F. Mahoney
	President and Chief Executive Officer
	May 6, 2021

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.

SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

By:	/s/ Daniel J. Brennan
	Daniel J. Brennan
	Executive Vice President and Chief Financial Officer
	May 6, 2021

XML

Cover Document - $ / shares	3 Months Ended
	Mar. 31, 2021	Apr. 30, 2021
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	1-11083
Entity Registrant Name	BOSTON SCIENTIFIC CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-2695240
Entity Address, Address Line One	300 Boston Scientific Way
Entity Address, City or Town	Marlborough
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01752-1234
City Area Code	508
Local Phone Number	683-4000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Listing, Par Value Per Share	$ 0.01
Entity Common Stock, Shares Outstanding		1,420,910,855
Entity Central Index Key	0000885725
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Stock [Member]
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	BSX
Security Exchange Name	NYSE
Senior Note due 2027 [Member]
Entity Information [Line Items]
Title of 12(b) Security	0.625% Senior Notes due 2027
Trading Symbol	BSX27
Security Exchange Name	NYSE
5.50% MCPS, Series A [Member]
Entity Information [Line Items]
Title of 12(b) Security	5.50% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share
Trading Symbol	BSX PR A
Security Exchange Name	NYSE

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Net sales	$ 2,752	$ 2,543
Cost of products sold	894	806
Gross profit	1,858	1,737
Operating expenses:
Selling, general and administrative expenses	1,019	978
Research and development expenses	276	300
Royalty expense	12	12
Amortization expense	185	201
Intangible asset impairment charges	0	198
Contingent consideration net expense (benefit)	(6)	(108)
Restructuring net charges (credits)	5	10
Litigation-related net charges (credits)	4	0
Gain on disposal of business	(6)	0
Operating expenses	1,488	1,591
Operating income (loss)	370	146
Other income (expense):
Interest expense	(82)	(88)
Other, net	37	(36)
Income (loss) before income taxes	325	22
Income tax (benefit) expense	(16)	12
Net income (loss)	341	11
Preferred stock dividends	(14)	0
Net income (loss) available to common stockholders	$ 327	$ 11
Net income (loss) per common share — basic	$ 0.23	$ 0.01
Net income (loss) per common share — assuming dilution	$ 0.23	$ 0.01
Weighted-average shares outstanding
Basic	1,418.7	1,397.4
Assuming dilution	1,430.8	1,413.5

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Net income (loss)	$ 341	$ 11
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(83)	(177)
Net change in derivative financial instruments	129	75
Net change in defined benefit pensions and other items	1	0
Total other comprehensive income (loss)	47	(101)
Total comprehensive income (loss)	$ 388	$ (91)

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 2,016	$ 1,734
Trade accounts receivable, net	1,631	1,531
Inventories	1,407	1,351
Prepaid income taxes	192	194
Assets held for sale	0	1,133
Other current assets	855	751
Total current assets	6,101	6,694
Property, plant and equipment, net	2,053	2,084
Goodwill	10,868	9,951
Other intangible assets, net	5,991	5,917
Deferred tax assets	4,173	4,210
Other long-term assets	1,714	1,921
TOTAL ASSETS	30,900	30,777
Current liabilities:
Current debt obligations	13	13
Accounts payable	615	513
Accrued expenses	2,060	2,197
Other current liabilities	705	958
Total current liabilities	3,393	3,681
Long-term debt	9,082	9,130
Deferred income taxes	336	330
Other long-term liabilities	2,370	2,309
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value - authorized 50,000,000 shares - issued 10,062,500 shares as of March 31, 2021 and December 31, 2020	0	0
Common stock, $0.01 par value - authorized 2,000,000,000 shares - issued 1,683,861,226 shares as of March 31, 2021 and 1,679,911,918 shares as of December 31, 2020	17	17
Treasury stock, at cost - 263,289,848 shares as of March 31, 2021 and December 31, 2020	(2,251)	(2,251)
Additional paid-in capital	19,750	19,732
Accumulated deficit	(2,050)	(2,378)
Accumulated other comprehensive income (loss), net of tax	254	207
Total stockholders’ equity	15,719	15,326
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 30,900	$ 30,777

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Condensed Consolidated Balance Sheet (Parenthetical) [Abstract]
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	10,062,500	10,062,500
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	2,000,000,000	2,000,000,000
Common Stock, Shares, Issued	1,683,861,226	1,679,911,918
Treasury Stock, Shares	263,289,848	263,289,848

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Millions	Total	Preferred Stock	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2019		$ 0	$ 16	$ (1,717)	$ 17,561	$ (2,253)	$ 270
Beginning Balance (Shares Issued) at Dec. 31, 2019		0	1,642,488,911
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 11					11
Cumulative effect adjustment for adoption of ASU 2016-13	10					(10)
Total other comprehensive income (loss)	(101)						(101)
Stock-based compensation					28
Stock-based compensation (Shares)			4,388,331
Ending Balance at Mar. 31, 2020		$ 0	$ 16	(1,717)	17,589	(2,252)	168
Ending Balance (Shares Issued) at Mar. 31, 2020		0	1,646,877,242
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)						(147)
Total other comprehensive income (loss)							(37)
Stock issuance (Par value)		$ 0	$ 0
Preferred stock issuance (Value in excess of par)					975
Common stock issuance (Value in excess of par)					975
Stock issuance (Shares)		10,062,500	29,382,500
Preferred stock dividends						(5)
Stock-based compensation					50
Stock-based compensation (Shares)			493,824
Ending Balance at Jun. 30, 2020		$ 0	$ 17	(1,717)	19,590	(2,405)	131
Ending Balance (Shares Issued) at Jun. 30, 2020		10,062,500	1,676,753,566
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)						(155)
Total other comprehensive income (loss)							20
Preferred stock dividends						(14)
Stock-based compensation					97
Stock-based compensation (Shares)			2,674,643
Ending Balance at Sep. 30, 2020		$ 0	$ 17	(1,717)	19,687	(2,574)	151
Ending Balance (Shares Issued) at Sep. 30, 2020		10,062,500	1,679,428,209
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)						210
Total other comprehensive income (loss)							56
Preferred stock dividends						(14)
Repurchase of common stock				(535)
Stock-based compensation					45
Stock-based compensation (Shares)			483,709
Ending Balance at Dec. 31, 2020	15,326	$ 0	$ 17	(2,251)	19,732	(2,378)	207
Ending Balance (Shares Issued) at Dec. 31, 2020		10,062,500	1,679,911,918
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	341					341
Total other comprehensive income (loss)	47						47
Preferred stock dividends						(14)
Stock-based compensation					19
Stock-based compensation (Shares)			3,949,308
Ending Balance at Mar. 31, 2021	$ 15,719	$ 0	$ 17	$ (2,251)	$ 19,750	$ (2,050)	$ 254
Ending Balance (Shares Issued) at Mar. 31, 2021		10,062,500	1,683,861,226

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash provided by (used for) operating activities
Net income (loss)	$ 341	$ 11
Gain on disposal of businesses	(6)	0
Depreciation and amortization	268	277
Deferred and prepaid income taxes	(1)	7
Stock-based compensation expense	47	42
Intangible asset impairment charges	0	184
Net loss (gain) on investments and notes receivable	(37)	22
Contingent consideration net expense (benefit)	(6)	(108)
Inventory step-up amortization	8	18
Foreign exchange (gain) loss	2	7
Other, net	22	43
Trade accounts receivable	(117)	161
Inventories	(115)	(199)
Other assets	(128)	(128)
Accounts payable and accrued expenses	(10)	(456)
Other liabilities	16	42
Cash provided by (used for) operating activities	284	(77)
Investing activities:
Purchases of property, plant and equipment	(75)	(100)
Proceeds from sale of property, plant and equipment	4	3
Payments for acquisitions of businesses, net of cash acquired	(706)	0
Proceeds from royalty rights	22	23
Payments for investments and acquisitions of certain technologies	(13)	(2)
Proceeds from sale of investments	38	0
Proceeds from disposal of businesses	801	0
Cash provided by (used for) investing activities	71	(76)
Financing activities:
Payment of contingent consideration previously established in purchase accounting	(11)	(23)
Payments for royalty rights	(42)	(52)
Payments on short-term borrowings	0	(300)
Proceeds from short-term borrowings, net of debt issuance costs	0	1,000
Net increase (decrease) in commercial paper	0	(714)
Payments on borrowings from credit facilities	0	(479)
Proceeds from borrowings on credit facilities	0	1,839
Payments on long-term borrowings and debt extinguishment costs	0	(1,000)
Cash dividends paid on preferred stock	(14)	0
Cash used to net share settle employee equity awards	(46)	(57)
Proceeds from issuances of common stock pursuant to employee stock compensation and purchase plans	18	42
Cash provided by (used for) financing activities	(95)	256
Effect of foreign exchange rates on cash	(3)	(9)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	258	93
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	1,995	607
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	2,253	700
Supplemental Information
Stock-based compensation expense	47	42
Fair value of contingent consideration recorded in purchase accounting	219	0
Non-cash impact of transferred royalty rights	$ (22)	$ (23)

XML

Consolidated Statements of Cash Flows (Supplemental Disclosure) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Cash and cash equivalents	$ 2,016	$ 1,734	$ 370
Restricted cash and restricted cash equivalents included in Other current assets	184	208	288
Restricted cash equivalents included in Other long-term assets	53	52	42
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	$ 2,253	$ 1,995	$ 700	$ 607

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the first quarter of 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Accordingly, our unaudited consolidated financial statements and footnotes thereto should be read in conjunction with our audited consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

Amounts reported in millions within this quarterly report are computed based on the amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.

Subsequent Events

We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure in our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly. Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note H – Commitments and Contingencies and Note I – Stockholders' Equity for further details.

XML

Acquisitions and Strategic Investments

3 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

ACQUISITIONS AND STRATEGIC INVESTMENTS

NOTE B – ACQUISITIONS, DIVESTITURES AND STRATEGIC INVESTMENTS

Our accompanying unaudited consolidated financial statements include the operating results for acquired entities from the respective dates of acquisition. We completed one acquisition and one divestiture in the first quarter of 2021 and did not complete any acquisitions or divestitures during the first quarter of 2020. We have not presented supplemental pro forma financial information for completed acquisitions or divestitures given their results are not material to our accompanying unaudited consolidated financial statements. Transaction costs for all acquisitions and divestitures completed during 2021 and 2020 were immaterial to our accompanying unaudited consolidated financial statements and were expensed as incurred.

On March 3, 2021, we announced our entry into a definitive agreement to acquire the global surgical business of Lumenis LTD. (Lumenis), a privately-held company that develops and commercializes energy-based medical solutions, for an upfront cash payment of approximately $1.070 billion subject to closing adjustments. The global surgical business of Lumenis includes innovative laser systems, fibers, and accessories used for urology and otolaryngology procedures. The acquisition is expected to close during the second half of 2021, subject to customary closing conditions. Following the closing of the acquisition, we plan to integrate the Lumenis business into our Urology and Pelvic Health division.

2021 Acquisition

On March 1, 2021, we completed the acquisition of Preventice Solutions, Inc. (Preventice), a privately-held company which offers a full portfolio of mobile cardiac health solutions and services, ranging from ambulatory cardiac monitors, to cardiac event monitors and mobile cardiac telemetry. The transaction consisted of an upfront cash payment of $925 million and up to an additional $300 million in a potential commercial milestone payment. We have been an investor in Preventice since 2015 and held an equity stake of approximately 22 percent immediately prior to the acquisition date. We remeasured the fair value of our previously-held investment based on the allocation of the purchase price according to priority of equity interests, which resulted in a $195 million gain recognized within Other, net in the first quarter of 2021. The transaction price for the remaining stake consisted of an upfront cash payment of $706 million, net of cash acquired, and up to approximately $230 million in an additional future revenue-based payment. The Preventice business is being managed by our Cardiac Rhythm Management division.

Purchase Price Allocation

The preliminary purchase price was comprised of the amounts presented below, which represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations. As of March 31, 2021, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified intangible assets and contingent consideration liability.

(in millions)
Payment for acquisition, net of cash acquired	$	706
Fair value of contingent consideration	219
Fair value of prior interest	269
	$	1,194

The preliminary purchase price allocation was comprised of the following components:

(in millions)
Goodwill	$	924
Amortizable intangible assets	236
Other assets acquired	66
Liabilities assumed	(32)
	$	1,194

We allocated a portion of the preliminary purchase price to the specific intangible asset categories as follows:

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	214	9	10%
Other intangible assets	22		8	10%
	$	236

Goodwill was primarily established due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies and is not deductible for tax purposes.

2021 Divestiture

On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business to Stark International Lux S.A.R.L., and SERB SAS, affiliates of SERB, a European specialty pharmaceutical group, for a purchase price of approximately $800 million, subject to certain adjustments including cash on hand at the closing of the transaction. The agreement included the transfer of five facilities and approximately 280 employees globally.

We classified the assets and liabilities of the Specialty Pharmaceuticals business (disposal group) as held for sale within our consolidated balance sheet as of December 31, 2020 at their respective carrying values, which approximated fair value, less costs to sell. Assets within the disposal group are presented within Assets held for sale and liabilities are presented within Other current liabilities within our consolidated balance sheet as of December 31, 2020. Refer to Note C – Assets and Liabilities Held for Sale to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information. In the first quarter of 2021, we recognized a $6 million Gain on disposal of business associated with the transaction within our accompanying unaudited consolidated statements of operations.

Contingent Consideration

Changes in the fair value of our contingent consideration liability were as follows:

(in millions)
Balance as of December 31, 2020	$	196
Amount recorded related to current year acquisitions	219
Contingent consideration net expense (benefit)	(6)
Contingent consideration payments	(11)
Balance as of March 31, 2021	$	398

As of March 31, 2021, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay associated with our completed acquisitions was $754 million, which includes amounts related to our acquisition of Preventice. Refer to Note B – Acquisitions and Strategic Investments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of March 31, 2021	Valuation Technique	Unobservable Input	Range				Weighted Average(1)
R&D, Regulatory and Commercialization-based Milestones	$103 million	Discounted Cash Flow	Discount Rate	2%				2%
			Probability of Payment	90%				90%
			Projected Year of Payment	2027				2027
Revenue-based Payments	$296 million	Discounted Cash Flow	Discount Rate	4	%	-	14%	7%
			Probability of Payment	80	%	-	100%	100%
			Projected Year of Payment	2021		-	2024	2022

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

Projected contingent payment amounts related to research and development (R&D), commercialization-based and revenue-based milestones are discounted back to the current period, primarily using a discounted cash flow model. Significant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement as of March 31, 2021.

Strategic Investments

The aggregate carrying amount of our strategic investments was comprised of the following:

	As of
(in millions)	March 31, 2021		December 31, 2020
Equity method investments	$	246	$	319
Measurement alternative investments(1)	182		183
Publicly-held equity securities(2)	213		414
Notes receivable	2		2
	$	643	$	918

(1)    Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations.

(2)    Publicly-held equity securities are measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations.

These investments are classified as Other long-term assets within our accompanying unaudited consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In the first quarter of 2021, we recorded a $146 million net loss on our investment in Pulmonx Corporation presented in Other, net associated with the partial disposition of our ownership and remeasurement of our remaining investment to fair value based on observable market prices. In addition, on March 1, 2021, we completed our acquisition of Preventice, in which we previously held an equity interest. As of March 31, 2021, the cost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by $286 million, which represents amortizable intangible assets, in-process research and development (IPR&D), goodwill and deferred tax liabilities.

XML

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of March 31, 2021				As of December 31, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization/ Write-offs(1)		Gross Carrying Amount		Accumulated Amortization/ Write-offs
Technology-related	$	11,279	$	(6,325)	$	11,059	$	(6,179)
Patents	499		(397)		511		(407)
Other intangible assets	1,810		(1,252)		1,775		(1,220)
Amortizable intangible assets	$	13,588	$	(7,975)	$	13,345	$	(7,806)
Goodwill	$	20,768	$	(9,900)	$	19,924	$	(9,973)
IPR&D	$	257			$	257
Technology-related	120				120
Indefinite-lived intangible assets	$	377			$	377

(1)    In the fourth quarter of 2020, we recorded goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business and classified the remaining assets and liabilities as held for sale as of December 31, 2020. On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. The goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business are no longer presented within accumulated write-offs above as of March 31, 2021.

The increase in our balance of goodwill and intangible assets is primarily related to our acquisition of Preventice in the first quarter of 2021.

Our technology-related intangible assets consist of technical processes, intellectual property and institutional understanding with respect to products and processes that we intend to leverage in future products or processes and will carry forward from one product generation to the next. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets and are amortizing them on a straight-line basis over their assigned estimated useful lives. Our IPR&D represents intangible assets that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use. The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region.

The following represents our goodwill balance by global reportable segment:

(in millions)	MedSurg		Rhythm and Neuro		Cardiovascular		Total
As of December 31, 2020	$	2,059	$	2,194	$	5,697	$	9,951
Impact of foreign currency fluctuations and other changes in carrying amount	(3)		(1)		(2)		(6)
Goodwill acquired	—		924		—		924
As of March 31, 2021	$	2,056	$	3,117	$	5,695	$	10,868

Prior to the divestiture on March 1, 2021, we presented the Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments.

Goodwill and Indefinite-Lived Intangible Asset Impairment Testing

We did not record any goodwill impairment charges in the first quarter 2021 or 2020. We did not record any Intangible asset impairment charges in the first quarter 2021 and recorded $198 million of Intangible asset impairment charges in the first quarter of 2020.

We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If we determine it is more likely than not that the asset is impaired based on our qualitative assessment of impairment indicators, we test the intangible asset for recoverability. If the carrying value of the intangible asset or asset group exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset or asset group, we will write the carrying value down to fair value in the period impairment is identified.

The impairment charges recorded in the first quarter of 2020 were primarily associated with amortizable technology-related intangible assets that were initially established following our acquisition of nVision. These charges were recorded as a result of management’s decision to change commercial launch plans or discontinue certain R&D programs based on cost to complete, time to market, overall economic viability or, specific to nVision, our understanding of the clinical evidence necessary to commercialize the technology.

We test our indefinite-lived intangible assets at least annually during the third quarter for impairment and reassess their classification as indefinite-lived assets. In addition, we review our indefinite-lived intangible assets for classification and impairment more frequently if impairment indicators exist. We assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that our indefinite-lived intangible assets are impaired. If we conclude that it is more likely than not that the asset is impaired, we then determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other. If the carrying value exceeds the fair value of the indefinite-lived intangible asset, we write the carrying value down to the fair value.

Refer to Note A – Significant Accounting Policies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for further discussion of our annual goodwill and intangible asset impairment testing.

XML

Hedging Activities and Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS

NOTE D – HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through risk management programs which include the use of derivative and nonderivative financial instruments. We operate these programs pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. Our derivative instruments do not subject our earnings to material risk, as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item.

We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

Currency Hedging Instruments

Risk Management Strategy

Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities, forecasted intercompany and third-party transactions, and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative and

nonderivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates.

The success of our currency risk management program depends, in part, on forecast transactions denominated primarily in Euro, Japanese yen, Chinese renminbi and Australian dollar. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecast. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Hedge Designations and Relationships

Certain of our currency derivative instruments are designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging (FASB ASC Topic 815), and are intended to protect the U.S. dollar value of forecasted transactions. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in the Net change in derivative financial instruments component of Other comprehensive income (loss), net of tax (OCI) within our accompanying unaudited consolidated statements of comprehensive income (loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, we recognize the gain or loss in earnings within Cost of products sold in our accompanying unaudited consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the gains or losses within Accumulated other comprehensive income (loss), net of tax (AOCI) to earnings at that time.

We also designate certain forward currency contracts as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Swiss franc, Japanese yen, British pound sterling, South Korean won and Taiwan dollar. For these derivative instruments, we elected to use the spot method to assess hedge effectiveness. We also elected to exclude the spot-forward difference, referred to as the excluded component, from the assessment of hedge effectiveness and are amortizing this amount separately, as calculated at the date of designation, on a straight-line basis over the term of the currency forward contracts. As such, we defer recognition of foreign currency gains and losses within the Foreign currency translation adjustment (CTA) component of OCI, and we reclassify amortization of the excluded component from AOCI to current period earnings within Interest expense in our accompanying unaudited consolidated statements of operations.

We designate certain euro-denominated debt as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro. As of March 31, 2021 and December 31, 2020, we designated as a net investment hedge a portion of our €900 million in aggregate principal amount of 0.625% senior notes issued in November 2019 and due in 2027. For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the CTA component of OCI. We reclassify these gains and losses to current period earnings within Other, net in our accompanying unaudited consolidated statements of operations only when the hedged item affects earnings, which would occur upon disposal or substantial liquidation of the underlying foreign subsidiary.

We also use forward currency contracts that are not part of designated hedging relationships under FASB ASC Topic 815 as a part of our strategy to manage our exposure to currency exchange rate risk related to monetary assets and liabilities and related forecast transactions. These non-designated currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year, and are marked-to-market with changes in fair value recorded to earnings within Other, net in our accompanying unaudited consolidated statements of operations.

Interest Rate Hedging Instruments

Risk Management Strategy

Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to mitigate the risk to our earnings and cash flows associated with exposure to changes in interest rates. Under these agreements, we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges in accordance with FASB ASC Topic 815.

Hedge Designations and Relationships

We had no interest rate derivative instruments designated as cash flow hedges outstanding as of March 31, 2021 and December 31, 2020. Prior to 2020, we terminated interest rate derivative instruments that were designated as cash flow hedges and are continuing to recognize the amortization of the gains or losses originally recorded within AOCI to earnings as a component of Interest expense over the same period that the hedged item affects earnings, provided the hedge relationship remains effective. If we determine the hedge relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the amount of gains or losses from AOCI to earnings at that time.

In the event that we designate outstanding interest rate derivative instruments as cash flow hedges, we record the changes in the fair value of the derivatives within OCI until the underlying hedged transaction occurs. The balance of the deferred amounts on our terminated cash flow hedges within AOCI was a $28 million loss as of March 31, 2021 and a $29 million loss as of December 31, 2020. We recognized immaterial gains and losses in Interest expense relating to the amortization of our terminated cash flow hedges in the current and prior periods.

We had no interest rate derivative instruments designated as fair value hedges outstanding as of March 31, 2021 and December 31, 2020. Prior to 2018, we terminated interest rate derivative instruments that were designated as fair value hedges and are continuing to recognize the amortization of the gains or losses originally recorded within Long-term debt in our accompanying unaudited consolidated balance sheets into earnings as a component of Interest expense over the same period that the discount or premium associated with the hedged items affects earnings. In the event that we designate outstanding interest rate derivative instruments as fair value hedges, we record the changes in the fair values of interest rate derivatives designated as fair value hedges and of the underlying hedged debt instruments in Interest expense, which generally offset. The balance of the deferred gains on our terminated fair value hedges within Long-term debt was immaterial as of March 31, 2021 and December 31, 2020. We recognized immaterial gains in Interest expense relating to the amortization of the terminated fair value hedges in the current and prior periods.

The following table presents the contractual amounts of our hedging instruments outstanding:

(in millions)	FASB ASC Topic 815 Designation	As of
		March 31, 2021		December 31, 2020
Forward currency contracts	Cash flow hedge	$	4,741	$	4,531
Forward currency contracts	Net investment hedge	1,004		1,004
Foreign currency-denominated debt(1)	Net investment hedge	927		868
Forward currency contracts	Non-designated	5,296		4,946
Total Notional Outstanding		$	11,969	$	11,349

(1)    Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge.

The remaining time to maturity as of March 31, 2021 is within 60 months for all forward currency contracts designated as cash flow hedges and generally less than one year for all non-designated forward currency contracts. The forward currency contracts designated as net investment hedges generally mature within the next two years. The euro-denominated debt principal designated as a net investment hedge has a contractual maturity of December 1, 2027.

The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 in our accompanying unaudited consolidated statements of operations. Refer to Note M – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our accompanying unaudited consolidated statements of comprehensive income (loss).

	Effect of Hedging Relationships on Accumulated Other Comprehensive Income
	Amount Recognized in OCI on Hedges						Unaudited Consolidated Statements of Operations(1)			Amount Reclassified from AOCI into Earnings
(in millions)	Pre-Tax Gain (Loss)		Tax Benefit (Expense)		Gain (Loss) Net of Tax		Location of Amount Reclassified and Total Amount of Line Item			Pre-Tax (Gain) Loss		Tax (Benefit) Expense		(Gain) Loss Net of Tax
Three Months Ended March 31, 2021
Forward currency contracts
Cash flow hedges	$	171	$	(39)	$	133	Cost of products sold	$	894	$	(6)	$	1	$	(5)
Net investment hedges(2)	52		(12)		40		Interest expense	82		(6)		1		(5)
Foreign currency-denominated debt
Net investment hedges(3)	48		(11)		37		Other, net	(37)		—		—		—
Interest rate derivative contracts
Cash flow hedges	—		—		—		Interest expense	82		1		—		1
Three Months Ended March 31, 2020
Forward currency contracts
Cash flow hedges	$	119	$	(27)	$	92	Cost of products sold	$	806	$	(23)	$	5	$	(18)
Net investment hedges(2)	22		(26)		(4)		Interest expense	88		(6)		1		(5)
Foreign currency-denominated debt
Net investment hedges(3)	24		(2)		22		Other, net	36		—		—		—
Interest rate derivative contracts
Cash flow hedges	—		—		—		Interest Expense	88		1		—		1

(1)    In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial.

(2)    For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.

(3)    For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.

As of March 31, 2021, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):

Designated Hedging Instrument	FASB ASC Topic 815 Designation	Location on Unaudited Consolidated Statements of Operations	Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Forward currency contracts	Cash flow hedge	Cost of products sold	$	79
Forward currency contracts	Net investment hedge	Interest expense	9
Interest rate derivative contracts	Cash flow hedge	Interest expense	(5)

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:

	Location on Unaudited Consolidated Statements of Operations	Three Months Ended March 31,
(in millions)		2021		2020
Net gain (loss) on currency hedge contracts	Other, net	$	(1)	$	(15)
Net gain (loss) on currency transaction exposures	Other, net	(1)		8
Net currency exchange gain (loss)		$	(2)	$	(7)

Fair Value Measurements

FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (FASB ASC Topic 820) and considering the estimated amount we would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative and nonderivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The following are the balances of our derivative and nonderivative assets and liabilities:

	Location on Unaudited Consolidated Balance Sheets(1)	As of
(in millions)		March 31, 2021		December 31, 2020
Derivative and Nonderivative Assets:
Designated Hedging Instruments
Forward currency contracts	Other current assets	$	122	$	53
Forward currency contracts	Other long-term assets	209		109
		332		162
Non-Designated Hedging Instruments
Forward currency contracts	Other current assets	67		79
Total Derivative and Nonderivative Assets		$	399	$	242
Derivative and Nonderivative Liabilities:
Designated Hedging Instruments
Forward currency contracts	Other current liabilities	$	22	$	44
Forward currency contracts	Other long-term liabilities	28		54
Foreign currency-denominated debt(2)	Other long-term liabilities	1,044		1,094
		1,094		1,191
Non-Designated Hedging Instruments
Forward currency contracts	Other current liabilities	57		71
Total Derivative and Nonderivative Liabilities		$	1,151	$	1,262

(1)    We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.

(2)    Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.

Recurring Fair Value Measurements

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The category of a financial asset or a financial liability within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

•Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

•Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

•Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

Assets and liabilities measured at fair value on a recurring basis consist of the following:

	As of
	March 31, 2021								December 31, 2020
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market funds and time deposits	$	1,759	$	—	$	—	$	1,759	$	1,584	$	—	$	—	$	1,584
Publicly-held equity securities	213		—		—		213		414		—		—		414
Hedging instruments	—		399		—		399		—		242		—		242
Licensing arrangements	—		—		338		338		—		—		365		365
	$	1,971	$	399	$	338	$	2,708	$	1,998	$	242	$	365	$	2,605
Liabilities
Hedging instruments	$	—	$	1,151	$	—	$	1,151	$	—	$	1,262	$	—	$	1,262
Contingent consideration liability	—		—		398		398		—		—		196		196
Licensing arrangements	—		—		356		356		—		—		407		407
	$	—	$	1,151	$	754	$	1,906	$	—	$	1,262	$	603	$	1,865

Our investments in money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as Cash and cash equivalents within our accompanying unaudited consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In addition to $1.759 billion invested in money market funds and time deposits as of March 31, 2021 and $1.584 billion as of December 31, 2020, we held $257 million in interest-bearing and non-interest-bearing bank accounts as of March 31, 2021 and $150 million as of December 31, 2020.

Our recurring fair value measurements using Level 3 inputs related to our contingent consideration liability. Refer to Note B – Acquisitions, Divestitures and Strategic Investments for a discussion of the changes in the fair value of our contingent consideration liability. In addition, our recurring fair value measurements using Level 3 inputs related to our licensing arrangements, including the contractual right to receive future royalty payments related to the Zytiga™ Drug. We recognized a financial asset and associated liability for our licensing arrangements at fair value in our accompanying unaudited consolidated balance sheets using the fair value option in accordance with FASB ASC Topic 825, Financial Instruments.

As of March 31, 2021, we have recorded the fair value of the financial asset and associated liability using a discounted cash flow approach considering the probability-weighted expected future cash flows to be generated by the royalty stream. The fair value of the financial liability also considers the related contractual provisions that govern our payment obligations. Significant increases or decreases in projected cash flows of the royalty stream and the related contractual provisions that govern our payment obligations, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement of the licensing arrangements' financial asset and liability as of March 31, 2021.

The recurring Level 3 fair value measurements of our licensing arrangements recognized in our accompanying unaudited consolidated balance sheets as of March 31, 2021 include the following significant unobservable inputs:

Licensing Arrangements	Fair Value as of March 31, 2021	Valuation Technique	Unobservable Input	Range				Weighted Average (1)
Financial Asset	$338 million	Discounted Cash Flow	Discount Rate	15%				15%
			Projected Year of Payment	2021		-	2025	2023
Financial Liability	$356 million	Discounted Cash Flow	Discount Rate	12	%	-	15%	13%
			Projected Year of Payment	2021		-	2026	2023

(1)    Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.

We own the contractual right to receive 50 percent of the future royalty payments from the licensee and remit such payments to the inventors associated with the intellectual property. Royalty payments we receive reduce the fair value of the financial asset and are presented within Proceeds from royalty rights, and payments we remit to inventors reduce the fair value of the financial liability and are presented within Payments for royalty rights within our unaudited consolidated statements of cash flows. We sold our right to receive and retain the other 50 percent of the future royalty payments in 2019 for an upfront cash payment, which we accounted for as a secured borrowing in accordance with FASB ASC Topic 860, Transfers and Servicing. Although we sold these rights, we continue to recognize at fair value the future royalty payments as a financial asset and associated liability. Royalty payments associated with the rights we sold no longer impact our cash flows, and we present this activity as Non-cash impact of transferred royalty rights in the supplemental information to our unaudited consolidated statements of cash flows. We reduce the fair value of the financial asset and associated liability when such non-cash activity occurs.

Changes in the fair value of our licensing arrangements' financial asset were as follows:

(in millions)
Balance as of December 31, 2020	$	365
Proceeds from royalty rights	(22)
Non-cash impact of transferred royalty rights	(22)
Fair value adjustment (expense) benefit	16
Balance as of March 31, 2021	$	338

Changes in the fair value of our licensing arrangements' financial liability were as follows:

(in millions)
Balance as of December 31, 2020	$	407
Payments for royalty rights	(42)
Non-cash impact of transferred royalty rights	(22)
Fair value adjustment expense (benefit)	13
Balance as of March 31, 2021	$	356

Non-Recurring Fair Value Measurements

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods after initial recognition. The fair value of a measurement alternative investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions, Divestitures and Strategic Investments for a discussion of our strategic investments, and Note C – Goodwill and Other Intangible Assets for a discussion of the fair values of our intangible assets including goodwill.

The fair value of our outstanding debt obligations was $10.225 billion as of March 31, 2021, including $1.067 billion relating to our euro-denominated December 2027 Notes, and $10.774 billion as of December 31, 2020, including $1.118 billion relating to our euro-denominated December 2027 Notes. We determined fair value by using quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy, and face value for commercial paper, term loans and credit facility borrowings outstanding. Refer to Note E – Contractual Obligations and Commitments for a discussion of our debt obligations.

XML

Contractual Obligations and Commitments

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

NOTE E – CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Borrowings and Credit Arrangements

We had total debt outstanding of $9.095 billion as of March 31, 2021 and $9.143 billion as of December 31, 2020, with current maturities of $13 million as of March 31, 2021 and $13 million as of December 31, 2020. The debt maturity schedule for our long-term debt obligations is presented below:

(in millions, except interest rates)	Issuance Date	Maturity Date	As of				Coupon Rate(1)
			March 31, 2021		December 31, 2020
May 2022 Notes	May 2015	May 2022	$	250	$	250	3.375%
October 2023 Notes	August 2013	October 2023	244		244		4.125%
March 2024 Notes	February 2019	March 2024	850		850		3.450%
May 2025 Notes	May 2015	May 2025	523		523		3.850%
June 2025 Notes	May 2020	June 2025	500		500		1.900%
March 2026 Notes	February 2019	March 2026	850		850		3.750%
December 2027 Notes	November 2019	December 2027	1,055		1,105		0.625%
March 2028 Notes	February 2018	March 2028	434		434		4.000%
March 2029 Notes	February 2019	March 2029	850		850		4.000%
June 2030 Notes	May 2020	June 2030	1,200		1,200		2.650%
November 2035 Notes(2)	November 2005	November 2035	350		350		7.000%
March 2039 Notes	February 2019	March 2039	750		750		4.550%
January 2040 Notes	December 2009	January 2040	300		300		7.375%
March 2049 Notes	February 2019	March 2049	1,000		1,000		4.700%
Unamortized Debt Issuance Discount and Deferred Financing Costs		2022 - 2049	(85)		(88)
Unamortized Gain on Fair Value Hedges		2023	5		5
Finance Lease Obligation		Various	6		7
Long-term debt			$	9,082	$	9,130

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

(1)    Coupon rates are semi-annual, except for the euro-denominated December 2027 Notes, which bear an annual coupon.

(2)    Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher.

Revolving Credit Facility

We maintain a $2.750 billion revolving credit facility (Revolving Credit Facility) with a global syndicate of commercial banks that matures on December 19, 2023 with one-year extension options, subject to certain conditions. This facility provides backing for our commercial paper program, and outstanding commercial paper directly reduces borrowing capacity under the Revolving Credit Facility. The credit agreement requires that we comply with the financial covenant described below. There were no amounts outstanding under the Revolving Credit Facility as of March 31, 2021 or December 31, 2020.

Financial Covenant

As of and through March 31, 2021, we were in compliance with the financial covenant required by all existing credit facilities described above:

	Covenant Requirement	Actual
	as of March 31, 2021	as of March 31, 2021
Maximum permitted leverage ratio(1)	4.50 times	3.29 times

(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended.

On April 21, 2020, we entered into an agreement with our banking syndicates to amend the financial covenant requirement for all of our outstanding credit arrangements as follows: (i) established a deemed Consolidated EBITDA of $671 million for the second, third and fourth quarters of 2020, reflecting average quarterly Consolidated EBITDA, as defined in the credit agreements, for 2018 and 2019; and (ii) maintain the maximum permitted leverage ratio of 4.75 times through the remainder of 2020, with a step-down for each succeeding fiscal quarter end, beginning with the first quarter of 2021, to 4.50 times, 4.25 times, 4.00 times and ultimately 3.75 times for the fourth quarter of 2021 and through the remaining term of the facility.

The financial covenant requirement provides for an exclusion from the calculation of consolidated EBITDA, as defined by the agreements, through maturity, of any non-cash charges and up to $500 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of March 31, 2021, we had $57 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreements, are excluded from the calculation of consolidated EBITDA, as defined by the agreements, provided that the sum of any excluded net cash litigation payments do not exceed $2.624 billion in the aggregate. As of March 31, 2021, we had $809 million of the litigation exclusion remaining.

Any inability to maintain compliance with this amended covenant could require us to seek to further renegotiate the terms of our Revolving Credit Facility or seek waivers from compliance with this covenant, both of which could result in additional borrowing costs. Further, there can be no assurance that our lenders would agree to such new terms or grant such waivers on terms acceptable to us. In this case, all Revolving Credit Facility commitments would terminate, and any amounts borrowed under the facility would become immediately due and payable. Furthermore, any termination of our Revolving Credit Facility may negatively impact the credit ratings assigned to our commercial paper program, which may impact our ability to refinance any then outstanding commercial paper as it becomes due and payable.

Commercial Paper

Our commercial paper program is backed by the Revolving Credit Facility, as discussed above, and outstanding commercial paper directly reduces borrowing capacity under the Revolving Credit Facility. We did not have any commercial paper outstanding as of March 31, 2021 or December 31, 2020.

Senior Notes

We had senior notes outstanding of $9.155 billion as of March 31, 2021 and $9.205 billion as of December 31, 2020. Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We have accounts receivable factoring programs in certain European countries and with commercial banks in China and Japan which include promissory notes discounting programs. We account for our factoring programs as sales under FASB ASC Topic 860, Transfers and Servicing. We have no retained interest in the transferred receivables, other than collection and administration, and once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy.

Amounts de-recognized for accounts and notes receivable, which are excluded from Trade accounts receivable, net in our accompanying unaudited consolidated balance sheets, are aggregated by contract denominated currency below (in millions):

Factoring Arrangements	As of March 31, 2021				As of December 31, 2020
	Amount De-recognized		Weighted Average Interest Rate		Amount De-recognized		Weighted Average Interest Rate
Euro denominated	$	149	2.0	%	$	148	1.9	%
Yen denominated	198		0.6	%	240		0.6	%
Renminbi denominated	—		3.5	%	—		3.5	%

Other Contractual Obligations and Commitments

We had outstanding letters of credit of $126 million as of March 31, 2021 and $124 million as of December 31, 2020, which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2021 and December 31, 2020, none of the beneficiaries had drawn upon the letters of credit or guarantees, and accordingly, we have not recognized a related liability for our outstanding letters of credit in our accompanying unaudited consolidated balance sheets as of March 31, 2021 and December 31, 2020.

Refer to Note F – Contractual Obligations and Commitments to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information on our borrowings and credit agreements.

XML

Supplemental Balance Sheet Information

3 Months Ended

Mar. 31, 2021

Supplemental Balance Sheet Information [Abstract]

SUPPLEMENTAL BALANCE SHEET INFORMATION

NOTE F – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited consolidated balance sheets are as follows:

Cash, cash equivalents, restricted cash and restricted cash equivalents

	As of
(in millions)	March 31, 2021		December 31, 2020
Cash and cash equivalents	$	2,016	$	1,734
Restricted cash and restricted cash equivalents in Other current assets	184		208
Restricted cash equivalents in Other long-term assets	53		52
	$	2,253	$	1,995

Trade accounts receivable, net

	As of
(in millions)	March 31, 2021		December 31, 2020
Trade accounts receivable	$	1,733	$	1,637
Allowance for credit losses	(101)		(105)
	$	1,631	$	1,531

The following is a rollforward of our Allowance for credit losses:

	Three Months Ended March 31,
(in millions)	2021		2020
Beginning balance	$	105	$	74
Cumulative effect adjustment(1)	n/a		10
Credit loss expense	2		9
Write-offs	(6)		(6)
Ending balance	$	101	$	87

(1)    Effective January 1, 2020, we adopted FASB ASC Topic 326, Financial Instruments - Credit Losses using the modified retrospective method, which requires that we recognize credit loss reserves when financial assets are established if credit losses are expected over the asset’s contractual life. Refer to Note R – New Accounting Pronouncements to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

In accordance with FASB ASC Topic 326, we record credit loss reserves to Allowance for credit losses when we establish Trade accounts receivable if credit losses are expected over the asset's contractual life. We base our estimates of credit loss reserves on historical experience and adjust, as necessary, to reflect current conditions using reasonable and supportable forecasts not already reflected in the historical loss information. We utilize an accounts receivable aging approach to determine the reserve to record at accounts receivable commencement for certain customers, applying country or region-specific factors. In performing the assessment of outstanding accounts receivable, regardless of country or region, we may consider significant factors relevant to collectability, including those specific to a customer such as bankruptcy, lengthy average payment cycles and type of account.

We closely monitor outstanding receivables for potential collection risks, including those that may arise from economic conditions. Our sales to government-owned or supported customers, particularly in southern Europe, are subject to an increased number of days outstanding prior to payment relative to other countries. More recently, we have seen an increase in the volume of our U.S. business conducted in ambulatory surgery centers. Many of these customers are smaller than those we have historically done business with and may have limited liquidity. We have adjusted our estimates of credit loss reserves for these customers, regions and conditions based on collection trends.

Inventories

	As of
(in millions)	March 31, 2021		December 31, 2020
Finished goods	$	921	$	893
Work-in-process	120		109
Raw materials	366		349
	$	1,407	$	1,351

Other current assets

	As of
(in millions)	March 31, 2021		December 31, 2020
Restricted cash and restricted cash equivalents	$	184	$	208
Derivative assets	190		133
Licensing arrangements	146		148
Other	335		263
	$	855	$	751

Property, plant and equipment, net

	As of
(in millions)	March 31, 2021		December 31, 2020
Land	$	104	$	104
Buildings and improvements	1,298		1,292
Equipment, furniture and fixtures	3,462		3,465
Capital in progress	418		446
	5,282		5,308
Less: accumulated depreciation	3,229		3,224
	$	2,053	$	2,084

Depreciation expense was $83 million for the first quarter of 2021 and $76 million for the first quarter of 2020.

Other long-term assets

	As of
(in millions)	March 31, 2021		December 31, 2020
Restricted cash equivalents	$	53	$	52
Operating lease right-of-use assets	407		458
Derivative assets	209		109
Investments	643		918
Licensing arrangements	191		218
Other	211		166
	$	1,714	$	1,921

Accrued expenses

	As of
(in millions)	March 31, 2021		December 31, 2020
Legal reserves	$	415	$	505
Payroll and related liabilities	710		681
Rebates	335		331
Contingent consideration liability	23		26
Other	578		656
	$	2,060	$	2,197

Other current liabilities

	As of
(in millions)	March 31, 2021		December 31, 2020
Deferred revenue	$	139	$	138
Licensing arrangements	148		153
Taxes payable	151		158
Liabilities held for sale	—		200
Other	268		307
	$	705	$	958

Other long-term liabilities

	As of
(in millions)	March 31, 2021		December 31, 2020
Accrued income taxes	$	557	$	547
Legal reserves	41		64
Contingent consideration liability	375		171
Licensing arrangements	208		253
Operating lease liabilities	353		401
Deferred revenue	264		257
Other	572		615
	$	2,370	$	2,309

XML

Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE G – INCOME TAXES

Our effective tax rate from continuing operations is presented below:

	Three Months Ended March 31,
	2021		2020
Effective tax rate from continuing operations	(4.9)	%	52.3	%

The change in our reported tax rates for the first quarter of 2021, as compared to the same period in 2020, relates primarily to a shift in geographical mix of earnings to lower-tax jurisdictions, and the impact of certain receipts and charges that are taxed at different rates than our effective tax rate. These receipts and charges include acquisition/divestiture-related net gains, as well as certain discrete tax items primarily related to changes to unrecognized tax benefits, and foreign return-to-provision adjustments, foreign audit settlements and expenses associated with recent acquisitions.

As of March 31, 2021, we had $274 million of gross unrecognized tax benefits, of which a net $189 million, if recognized, would affect our effective tax rate. As of December 31, 2020, we had $261 million of gross unrecognized tax benefits, of which a net $183 million, if recognized, would affect our effective tax rate. The change in our gross unrecognized tax benefit is primarily related to positions on new entities we acquired with recent acquisitions and restructuring activities.

It is reasonably possible that within the next 12 months we will resolve multiple issues with foreign, federal and state taxing authorities, resulting in a reduction in our balance of unrecognized tax benefits of up to $29 million.

Economic stimulus legislation has been enacted in many countries in response to the COVID-19 pandemic. In the U.S., the Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted on March 27, 2020, provided an estimated $2.2 trillion in COVID-19 pandemic-related relief, and included tax relief and government loans, subsidies and other relief for entities in affected industries. While we have not applied for government loans, we have taken advantage of the benefits offered in multiple jurisdictions, including the U.S. provision allowing taxpayers to defer payment of the employer portion of certain payroll taxes incurred in 2020. This allowed us to preserve cash generated from operations to service our debt obligations and other near-term commitments, and is expected to be paid in full by the end of 2022 as permitted by the legislation.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE H – COMMITMENTS AND CONTINGENCIES

The medical device market in which we participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These dynamics frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable rulings in several other matters; however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $455 million as of March 31, 2021 and $569 million as of December 31, 2020 and includes certain estimated costs of settlement, damages and defense. The decrease in our legal accrual was mainly due to settlement payments associated with product liability cases or claims related to transvaginal surgical mesh products. A portion of our legal accrual is already funded through our qualified settlement fund (QSF), which is included in restricted cash and restricted cash equivalents in Other current assets of $184 million as of March 31, 2021 and $208 million as of December 31, 2020. Refer to Note F – Supplemental Balance Sheet Information for additional information.

We recorded litigation-related net charges of $4 million during the first quarter of 2021, related to the finalization of a settlement with a coalition of state attorneys general associated with claims regarding our transvaginal surgical mesh products. We did not record any litigation-related net charges during the first quarter of 2020.

We record certain legal and product liability charges, credits and costs of defense, which we consider to be unusual or infrequent and significant as Litigation-related net charges (credits) in our accompanying unaudited consolidated financial statements. All other legal and product liability charges, credits and costs are recorded within Selling, general and administrative expenses in our accompanying unaudited consolidated statements of operations. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our financial covenant.

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our most recent Annual Report on Form 10-K and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be reasonably estimated.

Patent Litigation

On October 28, 2015, the Company filed suit against Cook Group Limited and Cook Medical LLC (collectively, “Cook”) in the United States District Court for the District of Delaware (1:15-cv-00980) alleging infringement of certain Company patents regarding Cook’s Instinct Endoscopic Hemoclip. The case was transferred to the District Court for the Southern District of Indiana. Cook filed seven Inter Partes Review (“IPR”) requests with the U.S. Patent and Trademark Office (USPTO) against the four asserted patents. All IPRs have concluded and Cook and the Company both appealed the Patent Office’s IPR decisions to the Federal Circuit Court of Appeals. On April 30, 2020, the U.S. Court of Appeals ruled that claims from two of the Company's patents remain valid, remanding two of the patents for further review by the USPTO’s Patent Trial and Appeal Board. In November 2020, the Patent Office issued remand rulings invalidating several additional claims. The district court stayed the case pending the appeals court decision on the IPRs, which is now complete. The case is proceeding before the United States District Court for the Southern District of Indiana, with the Company asserting two patents against Cook. Trial is anticipated in 2022.

On February 23, 2021, Nevro Corp. (“Nevro”) filed a complaint against the Company in the United States District Court for the District of Delaware (21-cv-258). The complaint alleges infringement of five Nevro patents by certain of the Company’s spinal cord stimulation systems.

Product Liability Litigation

As of April 21, 2021, approximately 54,000 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse have been asserted against us. As of April 21, 2021, we have entered into master settlement agreements in principle or are in the final stages of entering one with certain plaintiffs' counsel to resolve an aggregate of approximately 52,000 cases and claims, adjusted to reflect the Company’s analysis of expected non-participation and duplicate claims. These master settlement agreements provide that the settlement and distribution of settlement funds to participating claimants are conditional upon, among other things, achieving minimum required claimant participation thresholds. Of the approximately 52,000 cases and claims, approximately 48,000 have met the conditions of the settlement and are final. All settlement agreements were entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing. The pending cases are in various federal and state courts in the U.S. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases were specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. The Court issued an Order closing the MDL on February 11, 2021, as all cases that had been pending were dismissed or remanded to courts of primary jurisdiction. Outside the United States, there are fewer than 70 claims in the United Kingdom. In the first quarter of 2021, two class actions were filed against the Company in Australia, where there are fewer than 125 claims. There are also fewer than 10 cases in Canada, inclusive of one certified class action, which has settled and received Court approval. On April 16, 2019, the U.S. Food and Drug Administration (FDA) ordered that all manufacturers of surgical mesh products indicated for the transvaginal repair of pelvic organ prolapse stop selling and distributing their products in the United States immediately, stemming from the FDA’s 2016 reclassification of these devices to class III (high risk) devices, and as a result, the Company ceased global sales and distribution of surgical mesh products indicated for transvaginal pelvic organ prolapse. In April 2021 the Company's Board of Directors received a shareholder demand under section 220 of the Delaware General Corporation Law, for inspection of books and records. The Company has notified our insurer and retained counsel to respond to the demand.

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical

mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

We are currently named a defendant in 129 filed product liability cases involving our Greenfield Vena Cava Filter, which we discontinued marketing and active selling in the fourth quarter of 2018, alleging various injuries, including perforation of the vena cava, post-implant deep vein thrombosis, fracture, and other injuries. Most of the filed cases are part of a consolidated matter in Middlesex County, Massachusetts. We have received notice of an additional 553 claims, none of which have been filed.

Other Proceedings

On September 6, 2019, Boston Scientific Corporation, Boston Scientific Scimed, Inc., and Fortis Advisors, LLC, as a Securityholder Representative for the former Securityholders of nVision Medical Corp. filed a declaratory judgment action against BioCardia, Inc. in the United States District Court for the Northern District of California to address threats and allegations by BioCardia challenging inventorship and ownership of various patents that Boston Scientific Corporation acquired through an April 13, 2018 merger with nVision as well as related threats and allegations by BioCardia of trade secret misappropriation and unjust enrichment. On December 11, 2019, BioCardia filed an amended answer and counterclaims. On April 23, 2020, BioCardia filed a complaint against nVision, which had not been named as a defendant in the original case. On May 22, 2020, BioCardia amended its complaint against nVision to add twenty former nVision shareholders as defendants. On August 20, 2020, BioCardia again amended its complaint against Boston Scientific Corporation/Boston Scientific Scimed, Inc./Fortis Advisors, LLC and its complaint against nVision/nVision shareholders. On April 8, 2021, the parties settled the dispute, and, on April 12, 2021, the parties filed stipulations with the court to dismiss the remaining legal proceedings. We expect the settlement will not result in any material benefit or liability to the Company.

On December 4, 2020 Enrique Jevons, individually and on behalf of all others similarly situated, filed a class action complaint against the Company, Michael F. Mahoney and Daniel J. Brennan, stemming from the recall and retirement of the LOTUS Edge™ Aortic Valve System (LOTUS System) in United States District Court for the Eastern District of New York. On December 14, 2020, the parties agreed to transfer the case to the United States District Court for the District of Massachusetts. On December 16, 2020, Mariano Errichiello, individually and on behalf of all other similarly situated, filed a second, materially similar class action complaint against the Company, Michael F. Mahoney, Joseph M. Fitzgerald, and Daniel J. Brennan in the United States District Court for the District of Massachusetts. Subsequently, on March 30, 2021, the Court consolidated the two actions, and appointed Mariano Errichiello as the lead plaintiff. Counsel for Mr. Errichiello are required to file an Amended Complaint on or before June 4, 2021, in response to which the Company expects to bring a Motion to Dismiss. On December 15, 2020, the Securities and Exchange Commission’s Boston Regional Office (Boston SEC) notified the Company that it is conducting an investigation related to the Company’s decision to retire the LOTUS System, and issued a voluntary request for documents and information related to that decision. On February 10, 2021, the Boston SEC issued a second voluntary request for additional documents and information. The Company is cooperating fully with the investigation. On February 8, 2021, the Company received a letter from The Vladimir Gusinsky Revocable Trust, a shareholder, demanding that the Company’s Board of Directors conduct an investigation into actions by the Company’s directors and executive officers regarding statements made about the effectiveness and commercial viability of the LOTUS System. The Trust subsequently agreed to stay its demand, pending the outcome of any dispositive motion against the Amended Complaint in the class action complaint described above.

Matters Concluded Since December 31, 2020

On February 23, 2015, a judge for the Court of Modena (Italy) ordered a trial for the Company and three of its employees, as well as numerous other defendants charged in criminal proceedings. The charges arise from allegations that the defendants made improper donations to certain healthcare providers and other employees of the Hospital of Modena in order to induce them to conduct unauthorized clinical trials, as well as related government fraud in relation to the financing of such clinical trials. A trial began on February 24, 2016. On November 10, 2017, the Court issued a ruling that convicted one Company employee but acquitted two others and levied a fine of €245 thousand against us and imposed joint and several civil damages of €620 thousand on all defendants. We continue to deny these allegations, and timely appealed the decision on May 10, 2018. On November 9, 2020, the Court of Appeal in Bologna reversed the judgements against the Company and its employee and acquitted them of all charges. This judgment of acquittal became final as to the Company and its employee on April 15, 2021 when the prosecution chose not to appeal.

During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general regarding our transvaginal surgical mesh products and related alleged violations of states’ consumer protection statutes. On December 12, 2019, the Mississippi Attorney General filed suit against us in a Mississippi state court alleging violations of the Mississippi

Consumer Protection Act. In the fourth quarter of 2020 and the first quarter of 2021, we reached settlements with 48 states, including Mississippi, and the District of Columbia. These settlements were finalized in March of 2021.

XML

Stockholders' Equity

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE I – STOCKHOLDERS' EQUITY

Preferred Stock

We are authorized to issue 50 million shares of preferred stock in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by our stockholders.

On May 27, 2020, we completed an offering of 10,062,500 shares of 5.50% Mandatory Convertible Preferred Stock (MCPS), Series A at a price to the public and liquidation preference of $100 per share. The net proceeds from the MCPS offering were approximately $975 million after deducting underwriting discounts and commissions and offering expenses. As of March 31, 2021, our MCPS had an aggregate liquidation preference of $1.006 billion.

Holders of MCPS will be entitled to receive, when, as and if declared by our Board of Directors, or an authorized committee thereof, out of funds legally available for payment, cumulative dividends at the annual rate of 5.50% of the liquidation preference of $100 per share, payable in cash or, subject to certain limitations, by delivery of shares of common stock or any combination of cash and shares of common stock, at our election; provided, however, that any unpaid dividends on the MCPS will continue to accumulate as described in the Certificate of Designations.

Subject to certain exceptions, no dividend or distribution will be declared or paid on shares of our common stock, and no common stock will be purchased, redeemed or otherwise acquired for consideration by us or any of our subsidiaries unless, in each case, all accumulated and unpaid dividends for all preceding dividend periods have been declared and paid, or a sufficient amount of cash or number of shares of common stock has been set apart for the payment of such dividends, on all outstanding shares of MCPS. In the event of our voluntary or involuntary liquidation, winding-up or dissolution, no distribution of our assets may be made to holders of our common stock until we have paid holders of our MCPS, each of which will be entitled to receive a liquidation preference in the amount of $100 per share plus accumulated and unpaid dividends.

Unless earlier converted, each share of MCPS will automatically convert on June 1, 2023, subject to postponement for certain market disruption events, into between 2.3834 and 2.9197 shares of common stock, subject to customary anti-dilution adjustments. The number of shares of common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately preceding June 1, 2023.

The MCPS is not subject to any redemption, sinking fund or other similar provisions. However, at our option, we may purchase or exchange the MCPS from time to time in the open market, by tender or exchange offer or otherwise, without the consent of, or notice to, holders of MCPS. The holders of the MCPS will not have any voting rights, with limited exceptions.

In the first quarter of 2021, the Audit Committee of our Board of Directors (the Committee), pursuant to authority delegated to such committee by our Board of Directors, declared and we paid a cash dividend of $1.375 per MCPS share to holders of our MCPS as of February 15, 2021, representing a dividend period from December 2020 through February 2021. On April 26, 2021, the Committee declared a cash dividend of $1.375 per MCPS share to holders of our MCPS as of May 15, 2021, representing a dividend period from March through May 2021. We have presented cumulative, unpaid dividends within Accrued expenses within our unaudited consolidated balance sheet as of March 31, 2021.

Refer to Note L – Stockholders' Equity to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for information on the pertinent rights and privileges of our outstanding common stock.

XML

Weighted Average Shares Outstanding

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Weighted Average Number Of Shares Outstanding [Text Block]

NOTE J – WEIGHTED AVERAGE SHARES OUTSTANDING

	Three Months Ended March 31,
(in millions)	2021	2020
Weighted average shares outstanding - basic	1,418.7	1,397.4
Net effect of common stock equivalents	12.1	16.1
Weighted average shares outstanding - assuming dilution	1,430.8	1,413.5

The following securities were excluded from the calculation of weighted average shares outstanding - assuming dilution because their effect in the periods presented below would have been anti-dilutive:

	Three Months Ended March 31,
(in millions)	2021	2020
Stock options outstanding(1)	6	6
MCPS(2)	24	n/a

(1)    Represents stock options outstanding pursuant to our employee stock-based compensation plans with exercise prices that were greater than the average fair market value of our common stock for the related periods.

(2)    Represents common stock issuable upon the conversion of MCPS. Refer to Note I – Stockholders' Equity for additional information.

We base Net income (loss) per common share - assuming dilution upon the weighted-average number of common shares and common stock equivalents outstanding during each year. Potential common stock equivalents are determined using the treasury stock method. We exclude stock options, stock awards and MCPS from the calculation if the effect would be anti-dilutive. The dilutive effect of MCPS is calculated using the if-converted method. The if-converted method assumes that these securities were converted to shares of common stock at the beginning of the reporting period to the extent that the effect is dilutive.

For the first quarter 2021, the effect of assuming the conversion of MCPS into shares of common stock was anti-dilutive, and therefore excluded from the calculation of earnings per share (EPS). Accordingly, Net income was reduced by cumulative Preferred stock dividends, as presented in our accompanying unaudited consolidated statements of operations, for purposes of calculating Net income available to common stockholders.

We issued approximately four million shares of our common stock in the first quarter of 2021 and four million shares in the first quarter of 2020, following the exercise of stock options, vesting of deferred stock units or purchases under our employee stock purchase plan. We did not repurchase any shares of our common stock in the first quarter of 2021 or 2020. On December 14, 2020, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $1.000 billion of our common stock. As of March 31, 2021, we had the full amount remaining available under the authorization.

XML

Segment Reporting

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE K – SEGMENT REPORTING

Our seven core businesses are organized into three reportable segments: 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, goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits) and European Union (EU) Medical Device Regulation (MDR) implementation costs. Although we exclude these amounts from operating income of reportable segments, they are included in reported Income (loss) before income taxes in our accompanying unaudited consolidated statements of operations and are included in the reconciliation below.

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

	Three Months Ended March 31,
Net sales	2021			2020
MedSurg	$	860		$	774
Rhythm and Neuro	750			703
Cardiovascular	1,129			1,026
Total net sales of reportable segments	2,739			2,502
All other (Specialty Pharmaceuticals)(1)	13			41
Consolidated net sales	$	2,752		$	2,543
	Three Months Ended March 31,
Income (loss) before income taxes	2021			2020
MedSurg	$	332		$	259
Rhythm and Neuro	148			99
Cardiovascular	338			199
Total operating income of reportable segments	819			556
All other (Specialty Pharmaceuticals)(1)	4			26
Unallocated amounts:
Corporate expenses, including hedging activities	(153)			(33)
Intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits) and EU MDR implementation costs	(114)			(202)
Amortization expense	(185)			(201)
Operating income (loss)	370			146
Other expense, net	(45)			(124)
Income (loss) before income taxes	$	325		$	22
(1) On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales and income (loss) before income taxes for the first quarter of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.
Operating income of reportable segments as a percentage of net sales of reportable segments	Three Months Ended March 31,
	2021			2020
MedSurg	38.6		%	33.4		%
Rhythm and Neuro	19.7		%	14.1		%
Cardiovascular	30.0		%	19.4		%

XML

Revenue

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

NOTE L – REVENUE

We generate revenue primarily from the sale of single-use medical devices and present revenue net of sales taxes in our accompanying unaudited consolidated statements of operations. The following tables disaggregate our revenue from contracts with customers by business and geographic region (in millions):

	Three Months Ended March 31,
	2021						2020
Businesses	U.S.		Int'l		Total		U.S.		Int'l		Total
Endoscopy	$	280	$	219	$	499	$	256	$	186	$	442
Urology and Pelvic Health	257		104		361		237		95		332
Cardiac Rhythm Management	276		193		469		255		182		437
Electrophysiology	30		53		83		32		43		74
Neuromodulation	151		46		198		151		40		191
Interventional Cardiology	343		352		696		297		336		633
Peripheral Interventions	238		195		433		224		168		392
Specialty Pharmaceuticals	10		4		13		37		4		41
Net Sales	$	1,586	$	1,166	$	2,752	$	1,489	$	1,054	$	2,543

On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales for the first quarter of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.

	Three Months Ended March 31,
Geographic Regions	2021		2020
U.S.	$	1,577	$	1,452
EMEA (Europe, Middle East and Africa)	604		552
APAC (Asia-Pacific)	473		409
LACA (Latin America and Canada)	85		89
Medical Devices	2,739		2,502
U.S.	10		37
International	4		4
Specialty Pharmaceuticals	13		41
Net Sales	$	2,752	$	2,543
Emerging Markets(1)	$	317	$	273

(1)    We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess our list of Emerging Markets countries, and effective January 1, 2021, modified our list to include the following countries: Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Taiwan, Thailand, Turkey and Vietnam. We have revised prior year amounts to conform to the current year's presentation. The revision had an immaterial impact on previously reported Emerging Markets net sales.

Deferred Revenue

Contract liabilities are classified within Other current liabilities and Other long-term liabilities in our accompanying unaudited consolidated balance sheets. Our deferred revenue balance was $403 million as of March 31, 2021 and $395 million as of December 31, 2020. Our contractual liabilities are primarily composed of deferred revenue related to the LATITUDE™ Patient Management System within our Cardiac Rhythm Management (CRM) business, for which revenue is recognized over the average service period based on device and patient longevity. Our contractual liabilities also include deferred revenue related to the LUX-Dx™ Insertable Cardiac Monitor (ICM) system, also within our CRM business, for which revenue is recognized over the average service period based on device longevity and usage. We recognized revenue of $36 million in the first quarter of 2021 that was included in the above contract liability balance as of December 31, 2020. We have elected not to disclose the transaction price allocated to unsatisfied performance obligations when the original expected contract duration is one year or

less. In addition, we have not identified material unfulfilled performance obligations for which revenue is not currently deferred.

Variable Consideration

We generally allow our customers to return defective, damaged and, in certain cases, expired products for credit. We base our estimate for sales returns upon historical trends and record the amount as a reduction to revenue when we sell the initial product. In addition, we may allow customers to return previously purchased products for next-generation product offerings. For these transactions, we defer recognition of revenue on the sale of the earlier generation product based upon an estimate of the amount of product to be returned when the next-generation products are shipped to the customer. Uncertain timing of next-generation product approvals, variability in product launch strategies, product recalls and variation in product utilization all affect our estimates related to sales returns and could cause actual returns to differ from these estimates.

We also offer sales rebates and discounts to certain customers. We treat sales rebates and discounts as a reduction of revenue and classify the corresponding liability as current. We estimate rebates for products where there is sufficient historical information available to predict the volume of expected future rebates. If we are unable to reasonably estimate the expected rebates, we record a liability for the maximum rebate percentage offered. We have entered certain agreements with group purchasing organizations to sell our products to participating hospitals at negotiated prices. We recognize revenue from these agreements following the same revenue recognition criteria discussed above.

XML

Changes in Other Comprehensive Income

3 Months Ended

Mar. 31, 2021

Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract]

Comprehensive Income (Loss) Note [Text Block]

NOTE M – CHANGES IN OTHER COMPREHENSIVE INCOME

The following tables provide the reclassifications out of Other comprehensive income (loss), net of tax:

(in millions)	Foreign Currency Translation Adjustments		Net Change in Derivative Financial Instruments		Net Change in Defined Benefit Pensions and Other Items		Total
Balance as of December 31, 2020	$	218	$	36	$	(47)	$	207
Other comprehensive income (loss) before reclassifications	48		133		1		182
(Income) loss amounts reclassified from accumulated other comprehensive income(1)	(131)		(4)		—		(135)
Total other comprehensive income (loss)	(83)		129		1		47
Balance as of March 31, 2021	$	134	$	165	$	(45)	$	254

(1)    In connection with the completion of the divestiture of the Specialty Pharmaceuticals business in the first quarter of 2021, we released $127 million of cumulative translation adjustments associated with the disposed business from Accumulated other comprehensive income (loss), net of tax.

(in millions)	Foreign Currency Translation Adjustments		Net Change in Derivative Financial Instruments		Net Change in Defined Benefit Pensions and Other Items		Total
Balance as of December 31, 2019	$	142	$	173	$	(45)	$	270
Other comprehensive income (loss) before reclassifications	(172)		92		—		(80)
(Income) loss amounts reclassified from accumulated other comprehensive income	(5)		(17)		—		(21)
Total other comprehensive income (loss)	(177)		75		—		(101)
Balance as of March 31, 2020	$	(35)	$	248	$	(45)	$	168

Refer to Note D – Hedging Activities and Fair Value Measurements for further detail on our net investment hedges recorded in Foreign currency translation adjustments and our cash flow hedges recorded in Net change in derivative financial instruments.

The gains and losses on defined benefit and pension items before reclassifications and gains and losses on defined benefit and pension items reclassified from Accumulated other comprehensive income (loss), net of tax were reduced by immaterial income tax impacts in the first quarter 2021 and 2020.

XML

New Accounting Pronouncements

3 Months Ended

Mar. 31, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

New Accounting Pronouncements, Policy

NOTE N – NEW ACCOUNTING PRONOUNCEMENTS

Periodically, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our accompanying unaudited consolidated financial statements. During the first quarter of 2021, we implemented the following standards, which did not have a material impact on our financial position and results of operations.

Accounting Standards Implemented Since December 31, 2020

ASC Update No. 2020-10

In October 2020, the FASB issued ASC Update No. 2020-10, Codification Improvements. Update No. 2020-10 amends a wide variety of Topics in the Codification in order to improve the consistency of the Codification and the application thereof, while leaving Generally Accepted Accounting Principles unchanged.

ASC Update No. 2020-06

In August 2020, the FASB issued ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in Update No. 2020-06 simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.

ASC Update No. 2019-12

In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The purpose of Update No. 2019-12 is to continue the FASB’s Simplification Initiative to reduce complexity in accounting standards. The amendments in Update No. 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the incremental approach for intraperiod tax allocation, the requirement to recognize or derecognize deferred tax liabilities related to equity method investments that are also foreign subsidiaries, and the methodology for calculating income taxes in an interim period. In addition to removing these exceptions, Update No. 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes.

No other new accounting pronouncements issued or effective in the period had or are expected to have a material impact on our accompanying unaudited consolidated financial statements.

XML

Basis of Presentation Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure in our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly. Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note H – Commitments and Contingencies and Note I – Stockholders' Equity for further details.

XML

Fair Value Measurements Hedging Activities and Fair Value Measurements (Policies)	3 Months Ended
	Mar. 31, 2021
Fair Value Disclosures [Abstract]
Fair Value Measurement, Policy [Policy Text Block]	FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures
Derivatives, Policy [Policy Text Block]	Our derivative instruments do not subject our earnings to material risk, as the gains or losses on these derivatives generally offset losses or gains recognized on the hedged item.We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and by actively monitoring counterparty credit ratings and the amount of individual credit exposure. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.

XML

Commitments and Contingencies Commitments and Contingencies (Policies)	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Legal Costs, Policy [Policy Text Block]	In accordance with FASB ASC Topic 450, Contingencies, we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

XML

New Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

ASC Update No. 2020-10 Codification Improvements

ASC Update No. 2020-10

In October 2020, the FASB issued ASC Update No. 2020-10, Codification Improvements. Update No. 2020-10 amends a wide variety of Topics in the Codification in order to improve the consistency of the Codification and the application thereof, while leaving Generally Accepted Accounting Principles unchanged.

ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)

ASC Update No. 2020-06

In August 2020, the FASB issued ASC Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in Update No. 2020-06 simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.

ASC Update No. 2019-12, Income Taxes (Topic 740) [Policy Text Block]

ASC Update No. 2019-12

In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The purpose of Update No. 2019-12 is to continue the FASB’s Simplification Initiative to reduce complexity in accounting standards. The amendments in Update No. 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the incremental approach for intraperiod tax allocation, the requirement to recognize or derecognize deferred tax liabilities related to equity method investments that are also foreign subsidiaries, and the methodology for calculating income taxes in an interim period. In addition to removing these exceptions, Update No. 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes.

XML

Acquisitions and Strategic Investments (Tables)

3 Months Ended

Mar. 31, 2021

Business Acquisition [Line Items]

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Changes in the fair value of our contingent consideration liability were as follows:

(in millions)
Balance as of December 31, 2020	$	196
Amount recorded related to current year acquisitions	219
Contingent consideration net expense (benefit)	(6)
Contingent consideration payments	(11)
Balance as of March 31, 2021	$	398

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:

Contingent Consideration Liability	Fair Value as of March 31, 2021	Valuation Technique	Unobservable Input	Range				Weighted Average(1)
R&D, Regulatory and Commercialization-based Milestones	$103 million	Discounted Cash Flow	Discount Rate	2%				2%
			Probability of Payment	90%				90%
			Projected Year of Payment	2027				2027
Revenue-based Payments	$296 million	Discounted Cash Flow	Discount Rate	4	%	-	14%	7%
			Probability of Payment	80	%	-	100%	100%
			Projected Year of Payment	2021		-	2024	2022

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

Investment [Table Text Block]

The aggregate carrying amount of our strategic investments was comprised of the following:

	As of
(in millions)	March 31, 2021		December 31, 2020
Equity method investments	$	246	$	319
Measurement alternative investments(1)	182		183
Publicly-held equity securities(2)	213		414
Notes receivable	2		2
	$	643	$	918

(1)    Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations.

(2)    Publicly-held equity securities are measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations.

Preventice

Business Acquisition [Line Items]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

(in millions)
Payment for acquisition, net of cash acquired	$	706
Fair value of contingent consideration	219
Fair value of prior interest	269
	$	1,194

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

(in millions)
Goodwill	$	924
Amortizable intangible assets	236
Other assets acquired	66
Liabilities assumed	(32)
	$	1,194

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	214	9	10%
Other intangible assets	22		8	10%
	$	236

XML

Goodwill and Other Intangible Assets Goodwill (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill are as follows:

	As of March 31, 2021				As of December 31, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization/ Write-offs(1)		Gross Carrying Amount		Accumulated Amortization/ Write-offs
Technology-related	$	11,279	$	(6,325)	$	11,059	$	(6,179)
Patents	499		(397)		511		(407)
Other intangible assets	1,810		(1,252)		1,775		(1,220)
Amortizable intangible assets	$	13,588	$	(7,975)	$	13,345	$	(7,806)
Goodwill	$	20,768	$	(9,900)	$	19,924	$	(9,973)
IPR&D	$	257			$	257
Technology-related	120				120
Indefinite-lived intangible assets	$	377			$	377

(1)    In the fourth quarter of 2020, we recorded goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business and classified the remaining assets and liabilities as held for sale as of December 31, 2020. On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. The goodwill impairment charges of $73 million related to the Specialty Pharmaceuticals business are no longer presented within accumulated write-offs above as of March 31, 2021.

Schedule of Goodwill [Table Text Block]

The following represents our goodwill balance by global reportable segment:

(in millions)	MedSurg		Rhythm and Neuro		Cardiovascular		Total
As of December 31, 2020	$	2,059	$	2,194	$	5,697	$	9,951
Impact of foreign currency fluctuations and other changes in carrying amount	(3)		(1)		(2)		(6)
Goodwill acquired	—		924		—		924
As of March 31, 2021	$	2,056	$	3,117	$	5,695	$	10,868

XML

Hedging Activities and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Derivative [Line Items]

Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]

The following table presents the contractual amounts of our hedging instruments outstanding:

(in millions)	FASB ASC Topic 815 Designation	As of
		March 31, 2021		December 31, 2020
Forward currency contracts	Cash flow hedge	$	4,741	$	4,531
Forward currency contracts	Net investment hedge	1,004		1,004
Foreign currency-denominated debt(1)	Net investment hedge	927		868
Forward currency contracts	Non-designated	5,296		4,946
Total Notional Outstanding		$	11,969	$	11,349

(1)    Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge.

Derivative Instruments, Gain (Loss) [Table Text Block]

	Effect of Hedging Relationships on Accumulated Other Comprehensive Income
	Amount Recognized in OCI on Hedges						Unaudited Consolidated Statements of Operations(1)			Amount Reclassified from AOCI into Earnings
(in millions)	Pre-Tax Gain (Loss)		Tax Benefit (Expense)		Gain (Loss) Net of Tax		Location of Amount Reclassified and Total Amount of Line Item			Pre-Tax (Gain) Loss		Tax (Benefit) Expense		(Gain) Loss Net of Tax
Three Months Ended March 31, 2021
Forward currency contracts
Cash flow hedges	$	171	$	(39)	$	133	Cost of products sold	$	894	$	(6)	$	1	$	(5)
Net investment hedges(2)	52		(12)		40		Interest expense	82		(6)		1		(5)
Foreign currency-denominated debt
Net investment hedges(3)	48		(11)		37		Other, net	(37)		—		—		—
Interest rate derivative contracts
Cash flow hedges	—		—		—		Interest expense	82		1		—		1
Three Months Ended March 31, 2020
Forward currency contracts
Cash flow hedges	$	119	$	(27)	$	92	Cost of products sold	$	806	$	(23)	$	5	$	(18)
Net investment hedges(2)	22		(26)		(4)		Interest expense	88		(6)		1		(5)
Foreign currency-denominated debt
Net investment hedges(3)	24		(2)		22		Other, net	36		—		—		—
Interest rate derivative contracts
Cash flow hedges	—		—		—		Interest Expense	88		1		—		1

(1)    In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings. All other amounts included in earnings related to hedging relationships were immaterial.

(2)    For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.

(3)    For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.

Derivative Instruments, Gain (Loss) that may be Reclassified from AOCI to Earnings within Twelve Months [Table Text Block]

As of March 31, 2021, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below (in millions):

Designated Hedging Instrument	FASB ASC Topic 815 Designation	Location on Unaudited Consolidated Statements of Operations	Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings
Forward currency contracts	Cash flow hedge	Cost of products sold	$	79
Forward currency contracts	Net investment hedge	Interest expense	9
Interest rate derivative contracts	Cash flow hedge	Interest expense	(5)

Derivatives Not Designated as Hedging Instruments [Table Text Block]

Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:

	Location on Unaudited Consolidated Statements of Operations	Three Months Ended March 31,
(in millions)		2021		2020
Net gain (loss) on currency hedge contracts	Other, net	$	(1)	$	(15)
Net gain (loss) on currency transaction exposures	Other, net	(1)		8
Net currency exchange gain (loss)		$	(2)	$	(7)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following are the balances of our derivative and nonderivative assets and liabilities:

	Location on Unaudited Consolidated Balance Sheets(1)	As of
(in millions)		March 31, 2021		December 31, 2020
Derivative and Nonderivative Assets:
Designated Hedging Instruments
Forward currency contracts	Other current assets	$	122	$	53
Forward currency contracts	Other long-term assets	209		109
		332		162
Non-Designated Hedging Instruments
Forward currency contracts	Other current assets	67		79
Total Derivative and Nonderivative Assets		$	399	$	242
Derivative and Nonderivative Liabilities:
Designated Hedging Instruments
Forward currency contracts	Other current liabilities	$	22	$	44
Forward currency contracts	Other long-term liabilities	28		54
Foreign currency-denominated debt(2)	Other long-term liabilities	1,044		1,094
		1,094		1,191
Non-Designated Hedging Instruments
Forward currency contracts	Other current liabilities	57		71
Total Derivative and Nonderivative Liabilities		$	1,151	$	1,262

(1)    We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.

(2)    Foreign currency-denominated debt is the portion of the €900 million debt principal designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Assets and liabilities measured at fair value on a recurring basis consist of the following:

	As of
	March 31, 2021								December 31, 2020
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Money market funds and time deposits	$	1,759	$	—	$	—	$	1,759	$	1,584	$	—	$	—	$	1,584
Publicly-held equity securities	213		—		—		213		414		—		—		414
Hedging instruments	—		399		—		399		—		242		—		242
Licensing arrangements	—		—		338		338		—		—		365		365
	$	1,971	$	399	$	338	$	2,708	$	1,998	$	242	$	365	$	2,605
Liabilities
Hedging instruments	$	—	$	1,151	$	—	$	1,151	$	—	$	1,262	$	—	$	1,262
Contingent consideration liability	—		—		398		398		—		—		196		196
Licensing arrangements	—		—		356		356		—		—		407		407
	$	—	$	1,151	$	754	$	1,906	$	—	$	1,262	$	603	$	1,865

The recurring Level 3 fair value measurements of our licensing arrangements recognized in our accompanying unaudited consolidated balance sheets as of March 31, 2021 include the following significant unobservable inputs:

Licensing Arrangements	Fair Value as of March 31, 2021	Valuation Technique	Unobservable Input	Range				Weighted Average (1)
Financial Asset	$338 million	Discounted Cash Flow	Discount Rate	15%				15%
			Projected Year of Payment	2021		-	2025	2023
Financial Liability	$356 million	Discounted Cash Flow	Discount Rate	12	%	-	15%	13%
			Projected Year of Payment	2021		-	2026	2023

(1)    Unobservable inputs relate to a single financial asset and liability. As such, unobservable inputs were not weighted by the relative fair value of the instruments. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.

Changes in the fair value of our licensing arrangements' financial asset were as follows:

(in millions)
Balance as of December 31, 2020	$	365
Proceeds from royalty rights	(22)
Non-cash impact of transferred royalty rights	(22)
Fair value adjustment (expense) benefit	16
Balance as of March 31, 2021	$	338

Changes in the fair value of our licensing arrangements' financial liability were as follows:

(in millions)
Balance as of December 31, 2020	$	407
Payments for royalty rights	(42)
Non-cash impact of transferred royalty rights	(22)
Fair value adjustment expense (benefit)	13
Balance as of March 31, 2021	$	356

XML

Contractual Obligations and Commitments (Tables)

3 Months Ended

Mar. 31, 2021

Debt Instrument [Line Items]

Schedule of Long-term Debt Instruments [Table Text Block]

(in millions, except interest rates)	Issuance Date	Maturity Date	As of				Coupon Rate(1)
			March 31, 2021		December 31, 2020
May 2022 Notes	May 2015	May 2022	$	250	$	250	3.375%
October 2023 Notes	August 2013	October 2023	244		244		4.125%
March 2024 Notes	February 2019	March 2024	850		850		3.450%
May 2025 Notes	May 2015	May 2025	523		523		3.850%
June 2025 Notes	May 2020	June 2025	500		500		1.900%
March 2026 Notes	February 2019	March 2026	850		850		3.750%
December 2027 Notes	November 2019	December 2027	1,055		1,105		0.625%
March 2028 Notes	February 2018	March 2028	434		434		4.000%
March 2029 Notes	February 2019	March 2029	850		850		4.000%
June 2030 Notes	May 2020	June 2030	1,200		1,200		2.650%
November 2035 Notes(2)	November 2005	November 2035	350		350		7.000%
March 2039 Notes	February 2019	March 2039	750		750		4.550%
January 2040 Notes	December 2009	January 2040	300		300		7.375%
March 2049 Notes	February 2019	March 2049	1,000		1,000		4.700%
Unamortized Debt Issuance Discount and Deferred Financing Costs		2022 - 2049	(85)		(88)
Unamortized Gain on Fair Value Hedges		2023	5		5
Finance Lease Obligation		Various	6		7
Long-term debt			$	9,082	$	9,130

Note: The table above does not include unamortized amounts related to interest rate contracts designated as cash flow hedges.

(1)    Coupon rates are semi-annual, except for the euro-denominated December 2027 Notes, which bear an annual coupon.

(2)    Corporate credit rating improvements may result in a decrease in the adjusted interest rate on our November 2035 Notes to the extent that our lowest credit rating is above BBB- or Baa3. The interest rates on our November 2035 Notes will be permanently reinstated to the issuance rate if the lowest credit ratings assigned to these senior notes is either A- or A3 or higher.

Summary Of Term Loan And Revolving Credit Facility Agreement Compliance With Debt Covenants [Table Text Block]

	Covenant Requirement	Actual
	as of March 31, 2021	as of March 31, 2021
Maximum permitted leverage ratio(1)	4.50 times	3.29 times

(1)Ratio of total debt to consolidated EBITDA, as defined by the credit agreements, as amended.

Transfer of Financial Assets Accounted for as Sales [Table Text Block]

Factoring Arrangements	As of March 31, 2021				As of December 31, 2020
	Amount De-recognized		Weighted Average Interest Rate		Amount De-recognized		Weighted Average Interest Rate
Euro denominated	$	149	2.0	%	$	148	1.9	%
Yen denominated	198		0.6	%	240		0.6	%
Renminbi denominated	—		3.5	%	—		3.5	%

XML

Supplemental Balance Sheet Information (Tables)

3 Months Ended

Mar. 31, 2021

Supplemental Balance Sheet Information [Abstract]

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Cash and cash equivalents	$	2,016	$	1,734
Restricted cash and restricted cash equivalents in Other current assets	184		208
Restricted cash equivalents in Other long-term assets	53		52
	$	2,253	$	1,995

Trade accounts receivable, net [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Trade accounts receivable	$	1,733	$	1,637
Allowance for credit losses	(101)		(105)
	$	1,631	$	1,531

	Three Months Ended March 31,
(in millions)	2021		2020
Beginning balance	$	105	$	74
Cumulative effect adjustment(1)	n/a		10
Credit loss expense	2		9
Write-offs	(6)		(6)
Ending balance	$	101	$	87

(1)    Effective January 1, 2020, we adopted FASB ASC Topic 326, Financial Instruments - Credit Losses using the modified retrospective method, which requires that we recognize credit loss reserves when financial assets are established if credit losses are expected over the asset’s contractual life. Refer to Note R – New Accounting Pronouncements to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K for additional information.

Inventory Disclosure [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Finished goods	$	921	$	893
Work-in-process	120		109
Raw materials	366		349
	$	1,407	$	1,351

Schedule of Other Current Assets [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Restricted cash and restricted cash equivalents	$	184	$	208
Derivative assets	190		133
Licensing arrangements	146		148
Other	335		263
	$	855	$	751

Property, plant and equipment, net [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Land	$	104	$	104
Buildings and improvements	1,298		1,292
Equipment, furniture and fixtures	3,462		3,465
Capital in progress	418		446
	5,282		5,308
Less: accumulated depreciation	3,229		3,224
	$	2,053	$	2,084

Schedule of Other Assets [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Restricted cash equivalents	$	53	$	52
Operating lease right-of-use assets	407		458
Derivative assets	209		109
Investments	643		918
Licensing arrangements	191		218
Other	211		166
	$	1,714	$	1,921

Schedule of Accrued Liabilities [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Legal reserves	$	415	$	505
Payroll and related liabilities	710		681
Rebates	335		331
Contingent consideration liability	23		26
Other	578		656
	$	2,060	$	2,197

Other Current Liabilities [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Deferred revenue	$	139	$	138
Licensing arrangements	148		153
Taxes payable	151		158
Liabilities held for sale	—		200
Other	268		307
	$	705	$	958

Other long-term liabilities [Table Text Block]

	As of
(in millions)	March 31, 2021		December 31, 2020
Accrued income taxes	$	557	$	547
Legal reserves	41		64
Contingent consideration liability	375		171
Licensing arrangements	208		253
Operating lease liabilities	353		401
Deferred revenue	264		257
Other	572		615
	$	2,370	$	2,309

XML

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2021

Schedule of Income Tax Rate Reconciliation [Line Items]

Schedule of Effective Income Tax Rate from Continuing Operations [Table Text Block]

	Three Months Ended March 31,
	2021		2020
Effective tax rate from continuing operations	(4.9)	%	52.3	%

XML

Weighted Average Shares Outstanding (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended March 31,
(in millions)	2021	2020
Weighted average shares outstanding - basic	1,418.7	1,397.4
Net effect of common stock equivalents	12.1	16.1
Weighted average shares outstanding - assuming dilution	1,430.8	1,413.5

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following securities were excluded from the calculation of weighted average shares outstanding - assuming dilution because their effect in the periods presented below would have been anti-dilutive:

	Three Months Ended March 31,
(in millions)	2021	2020
Stock options outstanding(1)	6	6
MCPS(2)	24	n/a

(1)    Represents stock options outstanding pursuant to our employee stock-based compensation plans with exercise prices that were greater than the average fair market value of our common stock for the related periods.

(2)    Represents common stock issuable upon the conversion of MCPS. Refer to Note I – Stockholders' Equity for additional information.

XML

Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

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

	Three Months Ended March 31,
Net sales	2021			2020
MedSurg	$	860		$	774
Rhythm and Neuro	750			703
Cardiovascular	1,129			1,026
Total net sales of reportable segments	2,739			2,502
All other (Specialty Pharmaceuticals)(1)	13			41
Consolidated net sales	$	2,752		$	2,543
	Three Months Ended March 31,
Income (loss) before income taxes	2021			2020
MedSurg	$	332		$	259
Rhythm and Neuro	148			99
Cardiovascular	338			199
Total operating income of reportable segments	819			556
All other (Specialty Pharmaceuticals)(1)	4			26
Unallocated amounts:
Corporate expenses, including hedging activities	(153)			(33)
Intangible asset impairment charges, acquisition/divestiture-related net charges (credits), restructuring and restructuring-related net charges (credits), certain litigation-related net charges (credits) and EU MDR implementation costs	(114)			(202)
Amortization expense	(185)			(201)
Operating income (loss)	370			146
Other expense, net	(45)			(124)
Income (loss) before income taxes	$	325		$	22
(1) On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales and income (loss) before income taxes for the first quarter of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.
Operating income of reportable segments as a percentage of net sales of reportable segments	Three Months Ended March 31,
	2021			2020
MedSurg	38.6		%	33.4		%
Rhythm and Neuro	19.7		%	14.1		%
Cardiovascular	30.0		%	19.4		%

XML

Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Disaggregation of Revenue [Abstract]

Disaggregation of Revenue [Table Text Block]

The following tables disaggregate our revenue from contracts with customers by business and geographic region (in millions):

	Three Months Ended March 31,
	2021						2020
Businesses	U.S.		Int'l		Total		U.S.		Int'l		Total
Endoscopy	$	280	$	219	$	499	$	256	$	186	$	442
Urology and Pelvic Health	257		104		361		237		95		332
Cardiac Rhythm Management	276		193		469		255		182		437
Electrophysiology	30		53		83		32		43		74
Neuromodulation	151		46		198		151		40		191
Interventional Cardiology	343		352		696		297		336		633
Peripheral Interventions	238		195		433		224		168		392
Specialty Pharmaceuticals	10		4		13		37		4		41
Net Sales	$	1,586	$	1,166	$	2,752	$	1,489	$	1,054	$	2,543

On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Our consolidated net sales for the first quarter of 2021 include Specialty Pharmaceuticals up to the date of the closing of the transaction.

	Three Months Ended March 31,
Geographic Regions	2021		2020
U.S.	$	1,577	$	1,452
EMEA (Europe, Middle East and Africa)	604		552
APAC (Asia-Pacific)	473		409
LACA (Latin America and Canada)	85		89
Medical Devices	2,739		2,502
U.S.	10		37
International	4		4
Specialty Pharmaceuticals	13		41
Net Sales	$	2,752	$	2,543
Emerging Markets(1)	$	317	$	273

(1)    We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Periodically, we assess our list of Emerging Markets countries, and effective January 1, 2021, modified our list to include the following countries: Brazil, Chile, China, Colombia, Czech Republic, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Russia, Saudi Arabia, Slovakia, South Africa, South Korea, Taiwan, Thailand, Turkey and Vietnam. We have revised prior year amounts to conform to the current year's presentation. The revision had an immaterial impact on previously reported Emerging Markets net sales.

XML

Changes in Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2021

Other Comprehensive Income (Loss) Net of Tax, Period Change [Abstract]

Changes in Other Comprehensive Income [Table Text Block]

The following tables provide the reclassifications out of Other comprehensive income (loss), net of tax:

(in millions)	Foreign Currency Translation Adjustments		Net Change in Derivative Financial Instruments		Net Change in Defined Benefit Pensions and Other Items		Total
Balance as of December 31, 2020	$	218	$	36	$	(47)	$	207
Other comprehensive income (loss) before reclassifications	48		133		1		182
(Income) loss amounts reclassified from accumulated other comprehensive income(1)	(131)		(4)		—		(135)
Total other comprehensive income (loss)	(83)		129		1		47
Balance as of March 31, 2021	$	134	$	165	$	(45)	$	254

(1)    In connection with the completion of the divestiture of the Specialty Pharmaceuticals business in the first quarter of 2021, we released $127 million of cumulative translation adjustments associated with the disposed business from Accumulated other comprehensive income (loss), net of tax.

(in millions)	Foreign Currency Translation Adjustments		Net Change in Derivative Financial Instruments		Net Change in Defined Benefit Pensions and Other Items		Total
Balance as of December 31, 2019	$	142	$	173	$	(45)	$	270
Other comprehensive income (loss) before reclassifications	(172)		92		—		(80)
(Income) loss amounts reclassified from accumulated other comprehensive income	(5)		(17)		—		(21)
Total other comprehensive income (loss)	(177)		75		—		(101)
Balance as of March 31, 2020	$	(35)	$	248	$	(45)	$	168

XML

Acquisitions (Details) $ in Millions			3 Months Ended
	Mar. 03, 2021 USD ($)	Mar. 01, 2021 USD ($) units	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired			$ 706	$ 0
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			754
Business Combination, Contingent Consideration, Liability			398		$ 196
Goodwill			10,868		$ 9,951
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal			6	$ 0
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Specialty Pharmaceuticals [Member]
Business Acquisition [Line Items]
Disposal Group, Including Discontinued Operation, Consideration		$ 800
Transfer of facilities | units		5
Divestiture, agreement, transfer of global employees | units		280
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal			6
Lumenis LTD
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	$ 1,070
Preventice
Business Acquisition [Line Items]
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination		$ 925
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High, Including Prior Interest		$ 300
Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage		22.00%
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain			195
Payments to Acquire Businesses, Net of Cash Acquired		$ 706	706
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		$ 230
Business Combination, Contingent Consideration, Liability			219
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value			269
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination			1,194
Goodwill			924
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			236
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets			66
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities			(32)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill			236
Preventice | Technology-Based Intangible Assets [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			$ 214
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			9 years
Preventice | Other Intangible Assets [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles			$ 22
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			8 years
Preventice | Weighted Average [Member] | Technology-Based Intangible Assets [Member]
Business Acquisition [Line Items]
Discount Rate, Fair Value Input			10.00%
Preventice | Weighted Average [Member] | Other Intangible Assets [Member]
Business Acquisition [Line Items]
Discount Rate, Fair Value Input			10.00%

XML

Contingent Consideration (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration [Abstract]
Business Combination, Contingent Consideration, Liability Beginning Balance	$ 196
Fair value of contingent consideration recorded in purchase accounting	219	$ 0
Contingent consideration net expense (benefit)	(6)	$ (108)
Payment of contingent consideration	(11)
Business Combination, Contingent Consideration, Liability Ending Balance	398
Business Combination, Contingent Consideration Arrangements [Abstract]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			$ 754
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Business Combination, Contingent Consideration, Liability	398		398
Valuation Technique, Discounted Cash Flow [Member] | R&D, Regulatory and Commercialization-based Milestone [Member]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration [Abstract]
Business Combination, Contingent Consideration, Liability Ending Balance	103
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Business Combination, Contingent Consideration, Liability	103		$ 103
contingent consideration liability, probability of payment			90.00%
Discount Rate, Fair Value Input			2.00%
Valuation Technique, Discounted Cash Flow [Member] | revenue-based payments [Member]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration [Abstract]
Business Combination, Contingent Consideration, Liability Ending Balance	296
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Business Combination, Contingent Consideration, Liability	$ 296		$ 296
Minimum [Member] | Valuation Technique, Discounted Cash Flow [Member] | revenue-based payments [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
contingent consideration liability, probability of payment			80.00%
Discount Rate, Fair Value Input			4.00%
Maximum [Member] | Valuation Technique, Discounted Cash Flow [Member] | revenue-based payments [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
contingent consideration liability, probability of payment			100.00%
Discount Rate, Fair Value Input			14.00%
Weighted Average [Member] | Valuation Technique, Discounted Cash Flow [Member] | R&D, Regulatory and Commercialization-based Milestone [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
contingent consideration liability, probability of payment			90.00%
Discount Rate, Fair Value Input			2.00%
Weighted Average [Member] | Valuation Technique, Discounted Cash Flow [Member] | revenue-based payments [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
contingent consideration liability, probability of payment			100.00%
Discount Rate, Fair Value Input			7.00%

XML

Strategic Investments (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Schedule of Investments [Line Items]
Equity method investments	$ 246	$ 319
Measurement alternative investments(1)	182	183
Equity Securities, FV-NI	213	414
Notes receivable	2	2
Investments	643	$ 918
Equity Securities, FV-NI, Gain (Loss)	(146)
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity	$ 286

XML

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Intangible Assets and Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	$ 13,588		$ 13,345
Finite-Lived Intangible Assets, Accumulated Amortization	(7,975)		(7,806)
Indefinite-lived Intangible Assets (Excluding Goodwill)	377		377
Impairment of Intangible Assets (Excluding Goodwill)	0	$ 198
Goodwill [Roll Forward]
Goodwill Beginning Balance	9,951
Goodwill, Translation and Purchase Accounting Adjustments	(6)
Goodwill, Acquired During Period	924
Goodwill Ending Balance	10,868		9,951
MedSurg [Member]
Goodwill [Roll Forward]
Goodwill Beginning Balance	2,059
Goodwill, Translation and Purchase Accounting Adjustments	(3)
Goodwill, Acquired During Period	0
Goodwill Ending Balance	2,056		2,059
Rhythm and Neuro [Member]
Goodwill [Roll Forward]
Goodwill Beginning Balance	2,194
Goodwill, Translation and Purchase Accounting Adjustments	(1)
Goodwill, Acquired During Period	924
Goodwill Ending Balance	3,117		2,194
Cardiovascular [Member]
Goodwill [Roll Forward]
Goodwill Beginning Balance	5,697
Goodwill, Translation and Purchase Accounting Adjustments	(2)
Goodwill, Acquired During Period	0
Goodwill Ending Balance	5,695		5,697
Specialty Pharmaceuticals [Member]
Goodwill [Roll Forward]
Goodwill, Impairment Loss			73
Goodwill [Member]
Intangible Assets and Goodwill [Line Items]
Goodwill, Gross	20,768		19,924
Goodwill, Impaired, Accumulated Impairment Loss	(9,900)		(9,973)
In Process Research and Development [Member]
Intangible Assets and Goodwill [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill)	257		257
Technology-Based Intangible Assets [Member]
Intangible Assets and Goodwill [Line Items]
Indefinite-lived Intangible Assets (Excluding Goodwill)	120		120
Technology-Based Intangible Assets [Member]
Intangible Assets and Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	11,279		11,059
Finite-Lived Intangible Assets, Accumulated Amortization	(6,325)		(6,179)
Patents [Member]
Intangible Assets and Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	499		511
Finite-Lived Intangible Assets, Accumulated Amortization	(397)		(407)
Other Intangible Assets [Member]
Intangible Assets and Goodwill [Line Items]
Finite-Lived Intangible Assets, Gross	1,810		1,775
Finite-Lived Intangible Assets, Accumulated Amortization	$ (1,252)		$ (1,220)

XML

Hedging Activities and Fair Value Measurements (Details) € in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) units	Mar. 31, 2020 USD ($)	Mar. 31, 2021 EUR (€) units	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Derivative Instruments, Gain (Loss) [Line Items]
AOCI, Cash Flow Hedge, Cumulative Gain (Loss), after Tax	$ 165	$ 248		$ 36	$ 173
Derivative, Notional Amount	11,969			11,349
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax	133	92
Cost of Goods and Services Sold	894	806
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax	4	17
Interest Expense	82	88
Other Operating Income (Expense), Net	(37)	36
Net currency exchange gain (loss)	(2)	(7)
Derivative Asset, Fair Value, Gross Asset	399			242
Derivative Liability, Fair Value, Gross Liability	1,151			1,262
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity Securities, FV-NI	213			414
Derivative Asset	209			109
Licensing arrangements, asset	191			218
Business Combination, Contingent Consideration, Liability	398			196
Licensing arrangements, liability	208			253
Cash	257			150
Non-cash impact of transferred royalty rights	(22)	(23)
Debt Instrument, Fair Value Disclosure	10,225			10,774
December 2027 Notes [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Long-term Debt	$ 1,055		€ 900	1,105
Debt Instrument, Interest Rate, Stated Percentage	0.625%		0.625%
Licensing arrangement assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount Rate, Fair Value Input	15.00%		15.00%
Proceeds from Royalties Received	$ (22)
Non-cash impact of transferred royalty rights	(22)
Increase (Decrease) in Fair Value Adjustments on Other Assets (Liabilities) Carried at Fair Value under Fair Value Option	16
Licensing arrangement liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-cash impact of transferred royalty rights	(22)
Payments for Royalties	(42)
Increase (Decrease) in Fair Value Adjustments on Other Assets (Liabilities) Carried at Fair Value under Fair Value Option	13
Euro-denominated outstanding debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Fair Value Disclosure	1,067			1,118
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Licensing arrangements, asset	338
Licensing arrangements, liability	356
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money Market Funds, at Carrying Value	1,759			1,584
Equity Securities, FV-NI	213			414
Derivative Asset	399			242
Licensing arrangements, asset	338			365
Assets, Fair Value Disclosure	2,708			2,605
Derivative Liability	1,151			1,262
Business Combination, Contingent Consideration, Liability	398			196
Licensing arrangements, liability	356			407
Financial and Nonfinancial Liabilities, Fair Value Disclosure	1,906			1,865
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money Market Funds, at Carrying Value	1,759			1,584
Equity Securities, FV-NI	213			414
Derivative Asset	0			0
Licensing arrangements, asset	0			0
Assets, Fair Value Disclosure	1,971			1,998
Derivative Liability	0			0
Business Combination, Contingent Consideration, Liability	0			0
Licensing arrangements, liability	0			0
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money Market Funds, at Carrying Value	0			0
Equity Securities, FV-NI	0			0
Derivative Asset	399			242
Licensing arrangements, asset	0			0
Assets, Fair Value Disclosure	399			242
Derivative Liability	1,151			1,262
Business Combination, Contingent Consideration, Liability	0			0
Licensing arrangements, liability	0			0
Financial and Nonfinancial Liabilities, Fair Value Disclosure	1,151			1,262
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money Market Funds, at Carrying Value	0			0
Equity Securities, FV-NI	0			0
Derivative Asset	0			0
Licensing arrangements, asset	338			365
Assets, Fair Value Disclosure	338			365
Derivative Liability	0			0
Business Combination, Contingent Consideration, Liability	398			196
Licensing arrangements, liability	356			407
Financial and Nonfinancial Liabilities, Fair Value Disclosure	754			603
Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	332			162
Derivative Instruments in Hedges, Liabilities, at Fair Value	1,094			1,191
Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Liabilities, at Fair Value	$ 1,044			1,094
Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Forward Currency Contracts, Time to Maturity | units	60		60
Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	$ 122			53
Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Other Noncurrent Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Assets, at Fair Value	209			109
Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Other Current Liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Liabilities, at Fair Value	22			44
Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Other Noncurrent Liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments in Hedges, Liabilities, at Fair Value	28			54
Not Designated as Hedging Instrument [Member] | Other Nonoperating Income (Expense) [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments	(1)	(15)
Foreign Currency Transaction Gain (Loss), before Tax	(1)	8
Net currency exchange gain (loss)	(2)	(7)
Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	5,296			4,946
Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	67			79
Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Other Current Liabilities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value	$ 57			71
Weighted Average [Member] | Licensing arrangement assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount Rate, Fair Value Input	15.00%		15.00%
Weighted Average [Member] | Licensing arrangement liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount Rate, Fair Value Input	13.00%		13.00%
Minimum [Member] | Licensing arrangement liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount Rate, Fair Value Input	12.00%		12.00%
Maximum [Member] | Licensing arrangement liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount Rate, Fair Value Input	15.00%		15.00%
Cash Flow Hedging [Member] | Foreign Exchange Contract [Member] | Cost of Sales [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months	$ 79
Cash Flow Hedging [Member] | Interest Rate Contract [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	(5)
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	4,741			4,531
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Cost of Sales [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax	171	119
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax	(39)	(27)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax	133	92
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	(6)	(23)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	1	5
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax	(5)	(18)
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Interest Rate Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
AOCI, Cash Flow Hedge, Cumulative Gain (Loss), after Tax	(28)			(29)
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Interest Rate Contract [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	1	1
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax	1	1
Net Investment Hedging [Member] | Foreign Exchange Contract [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Used in Net Investment Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net	9
Net Investment Hedging [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	1,004			1,004
Net Investment Hedging [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Net Investment Hedge, Gain (Loss), before Reclassification and Tax	52	22
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), before Adjustments, Tax	(12)	(26)
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), before Adjustments, after Tax	40	(4)
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, before Tax	(6)	(6)
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, Tax	1	1
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, after Tax	(5)	(5)
Net Investment Hedging [Member] | Designated as Hedging Instrument [Member] | foreign currency denominated in debt [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	927			$ 868
Net Investment Hedging [Member] | Designated as Hedging Instrument [Member] | foreign currency denominated in debt [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Other Comprehensive Income (Loss), Net Investment Hedge, Gain (Loss), before Reclassification and Tax	48	24
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), before Adjustments, Tax	(11)	(2)
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), before Adjustments, after Tax	37	22
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, before Tax	0	0
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, Tax	0	0
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, after Tax	$ 0	$ 0

XML

Contractual Obligations and Commitments (Details) € in Millions, $ in Millions		3 Months Ended	12 Months Ended
	Apr. 21, 2020 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Mar. 31, 2021 EUR (€)
Debt Instrument [Line Items]
Total debt		$ 9,095	$ 9,143
Debt, Current		13	13
Long-term Debt and Capital Lease Obligations		9,082	9,130
Deemed Consolidated EBITDA	$ 671
Exclusion from EBITDA for Restructuring Charges		500
Restructuring charges remaining to be excluded from calculation of consolidated EBITDA		57
Litigation and Debt Exclusion from EBITDA		2,624
Legal payments remaining to be excluded from calculation of consolidated EBITDA		809
Letters of Credit Outstanding, Amount		$ 126	124
Current Requirement [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio		4.50		4.50
Actual, Covenant [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio		3.29		3.29
Requirement, third quarter following qualified acquisition [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio		4.50		4.50
Requirement, fourth quarter following qualified acquisition [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio		4.25		4.25
Requirement, fifth quarter following qualified acquisition [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio		4.00		4.00
Requirement, sixth quarter and thereafter following qualified acquisition [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio		3.75		3.75
Requirement, extension through the remainder of 2020 [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio	4.75
the 2018 Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 2,750
May 2022 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 250	250
Debt Instrument, Interest Rate, Stated Percentage		3.375%		3.375%
October 2023 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 244	244
Debt Instrument, Interest Rate, Stated Percentage		4.125%		4.125%
March 2024 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 850	850
Debt Instrument, Interest Rate, Stated Percentage		3.45%		3.45%
May 2025 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 523	523
Debt Instrument, Interest Rate, Stated Percentage		3.85%		3.85%
June 2025 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 500	500
Debt Instrument, Interest Rate, Stated Percentage		1.90%		1.90%
March 2026 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 850	850
Debt Instrument, Interest Rate, Stated Percentage		3.75%		3.75%
December 2027 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 1,055	1,105	€ 900
Debt Instrument, Interest Rate, Stated Percentage		0.625%		0.625%
March 2028 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 434	434
Debt Instrument, Interest Rate, Stated Percentage		4.00%		4.00%
March 2029 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 850	850
Debt Instrument, Interest Rate, Stated Percentage		4.00%		4.00%
June 2030 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 1,200	1,200
Debt Instrument, Interest Rate, Stated Percentage		2.65%		2.65%
November 2035 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 350	350
Debt Instrument, Interest Rate, Stated Percentage		7.00%		7.00%
March 2039 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 750	750
Debt Instrument, Interest Rate, Stated Percentage		4.55%		4.55%
January 2040 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 300	300
Debt Instrument, Interest Rate, Stated Percentage		7.375%		7.375%
March 2049 Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 1,000	1,000
Debt Instrument, Interest Rate, Stated Percentage		4.70%		4.70%
Senior Notes [Member]
Debt Instrument [Line Items]
Long-term Debt		$ 9,155	9,205
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net		(85)	(88)
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Long-term Debt		5	5
Finance Lease Obligation
Debt Instrument [Line Items]
Long-term Debt		6	7
Euro Denominated Factoring Arrangements [Member]
Debt Instrument [Line Items]
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized		$ 149	$ 148
Average interest rate of de-recognized receivables		2.00%	1.90%
Yen Denominated Factoring Arrangements [Member]
Debt Instrument [Line Items]
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized		$ 198	$ 240
Average interest rate of de-recognized receivables		0.60%	0.60%
Renminbi Denominated Factoring Arrangements [Member]
Debt Instrument [Line Items]
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized		$ 0	$ 0
Average interest rate of de-recognized receivables		3.50%	3.50%

XML

Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Line Items]
Cash and Cash Equivalents	$ 2,016	$ 370	$ 1,734
Restricted Cash and Cash Equivalents in Other current assets	184	288	208
Restricted Cash Equivalents in Other long-term assets	53	42	52
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	2,253	700	1,995	$ 607
Other Current Assets [Abstract]
Restricted Cash and Cash Equivalents in Other current assets	184	288	208
Derivative Asset, Current	190		133
Licensing arrangements	146		148
Other Assets, Miscellaneous, Current	335		263
Other Assets, Current	855		751
Trade accounts receivable, net
Accounts receivable	1,733		1,637
Less: allowance for doubtful accounts	(101)		(105)
Trade accounts receivable, net	1,631		1,531
Allowance for doubtful accounts
Beginning balance	105	74
Accounts Receivable, Change in Method, Credit Loss Expense (Reversal)		10
Charges to expenses	2	9
Utilization of allowances	(6)	(6)
Ending balance	101	87
Inventories
Inventory, Finished Goods, Net of Reserves	921		893
Inventory, Work in Process, Net of Reserves	120		109
Inventory, Raw Materials, Net of Reserves	366		349
Inventories	1,407		1,351
Property, plant and equipment, net
Land	104		104
Buildings and improvements	1,298		1,292
Equipment, furniture and fixtures	3,462		3,465
Capital in progress	418		446
Property, plant and equipment	5,282		5,308
Less: accumulated depreciation	3,229		3,224
Property, plant and equipment, net	2,053		2,084
Supplemental Balance Sheet Information
Depreciation expense	83	76
Other Assets, Noncurrent [Abstract]
Restricted cash equivalents included in Other long-term assets	53	$ 42	52
Operating Lease, Right-of-Use Asset	407		458
Derivative Asset	209		109
Investments	643		918
Licensing arrangements, asset	191		218
Other, Other Long-term Assets	211		166
Other Assets, Noncurrent	1,714		1,921
Accrued expenses
Legal reserves, current	415		505
Payroll and related liabilities	710		681
Accrued Rebates, Current	335		331
Business Combination, Contingent Consideration, Liability, Current	23		26
Other	578		656
Accrued Liabilities, Current	2,060		2,197
Other Liabilities, Current [Abstract]
Deferred Revenue, Current	139		138
Accrued Royalties, Current	148		153
Taxes Payable, Current	151		158
Disposal Group, Including Discontinued Operation, Liabilities, Current	0		200
Other Sundry Liabilities, Current	268		307
Other Liabilities, Current	705		958
Other long-term liabilities
Accrued income taxes	557		547
Estimated Litigation Liability, Noncurrent	41		64
Business Combination, Contingent Consideration, Liability, Noncurrent	375		171
Licensing arrangements, liability	208		253
Operating Lease, Liability, Noncurrent	353		401
Deferred Revenue	264		257
Other Accrued Liabilities, Noncurrent	572		615
Other long-term liabilities	$ 2,370		$ 2,309

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Effective Income Tax Rate Reconciliation, Percent [Abstract]
Effective tax rate from continuing operations	(4.90%)	52.30%
Unrecognized Tax Benefits	$ 274		$ 261
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	189		$ 183
Decrease in Unrecognized Tax Benefits is Reasonably Possible	29
The CARES Act	$ 2,200,000

XML

Commitments and Contingencies (Details) € in Thousands		3 Months Ended
	Nov. 10, 2017 EUR (€)	Mar. 31, 2021 USD ($) claims units	Mar. 31, 2020 USD ($)	Apr. 21, 2021 USD ($) claims	Dec. 31, 2020 USD ($)
Loss Contingencies [Line Items]
Accrual for legal matters that are probable and estimable | $		$ 455,000,000			$ 569,000,000
Restricted Cash and Cash Equivalents in Other current assets | $		184,000,000	$ 288,000,000		$ 208,000,000
Litigation-related net charges (credits) | $		$ (4,000,000)	$ 0
Loss Contingency, Damages Awarded, Value | €	€ 245
Loss Contingency, Damages Paid, Value | €	€ 620
Product liability cases related to Greenfield Vena Cava Filter		129
Product liability claims, not filed, related to Greenfield Vena Cava Filter		553
State AG settlements, mesh related, number of states | units		48
Subsequent Event [Member]
Loss Contingencies [Line Items]
Product liability cases or claims related to mesh product				54,000
Product liability cases or claims related to mesh product - Canada				10
Certified class actions in Canada, Mesh				1
Product liability cases or claims related to mesh product - United Kingdom				70
Product liability cases or claims related to mesh product - Australia | $				125
Certified class actions in Australia, Mesh				2
Assigned to one judge in MA [Member] | Subsequent Event [Member]
Loss Contingencies [Line Items]
Product liability cases or claims related to mesh product				3,100
Settled Litigation [Member] | Subsequent Event [Member]
Loss Contingencies [Line Items]
Product liability cases or claims related to mesh product				52,000
Total Product liability cases and claims settled related to Mesh product				48,000

XML

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended
	Apr. 26, 2021	May 27, 2020	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Class of Stock [Line Items]
Preferred Stock, Shares Authorized			50,000,000		50,000,000
Preferred Stock, Shares Issued			10,062,500		10,062,500
Payments of Dividends			$ 14	$ 0
Common Stock, Shares Authorized			2,000,000,000		2,000,000,000
Common Stock, Par or Stated Value Per Share			$ 0.01		$ 0.01
5.50% MCPS, Series A [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Issued		10,062,500
Net proceeds from issuance of preferred stock in connection with public offering		$ 975
Preferred Stock, Dividend Rate, Percentage			5.50%
Preferred Stock, Liquidation Preference Per Share		$ 100	$ 100
Preferred Stock, Liquidation Preference, Value			$ 1,006
Preferred Stock, Dividends, Per Share, Cash Paid			$ 1.375
5.50% MCPS, Series A [Member] | Minimum [Member]
Class of Stock [Line Items]
Convertible Preferred Stock, Terms of Conversion			2.3834
5.50% MCPS, Series A [Member] | Maximum [Member]
Class of Stock [Line Items]
Convertible Preferred Stock, Terms of Conversion			2.9197
5.50% MCPS, Series A [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Preferred Stock, Dividends Per Share, Declared	$ 1.375

XML

Weighted Average Shares Outstanding (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted Average Number of Shares Outstanding, Basic	1,418,700	1,397,400
Weighted Average Number Diluted Shares Outstanding Adjustment	12,100	16,100
Weighted Average Number of Shares Outstanding, Diluted	1,430,800	1,413,500
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture	4,000	4,000
Share-based Payment Arrangement, Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	6,000	6,000
5.50% MCPS, Series A [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	24,000

XML

Segment Reporting (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) reportablesegments	Mar. 31, 2020 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | reportablesegments	3
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 2,752	$ 2,543
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Amortization expense	(185)	(201)
Operating income (loss)	370	146
Other expense, net	(45)	(124)
Income (loss) before income taxes	325	22
MedSurg [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	860	774
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating Income Allocated to Reportable Segments	$ 332	$ 259
Segment Operating Income as a Percentage of Net Sales	38.60%	33.40%
Rhythm and Neuro [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 750	$ 703
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating Income Allocated to Reportable Segments	$ 148	$ 99
Segment Operating Income as a Percentage of Net Sales	19.70%	14.10%
Cardiovascular [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 1,129	$ 1,026
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating Income Allocated to Reportable Segments	$ 338	$ 199
Segment Operating Income as a Percentage of Net Sales	30.00%	19.40%
BSX Reportable Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 2,739	$ 2,502
Total allocated to reportable segments [Member]
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating income (loss)	819	556
Specialty Pharmaceuticals [Member]
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating income (loss)	4	26
Corporate expenses and currency exchange [Member]
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating Income Unallocated to Segment	(153)	(33)
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
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating Income Unallocated to Segment	$ (114)	$ (202)

XML

Revenue (Details) $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) units	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)
Disaggregation of Revenue [Line Items]
Emerging Markets total countries | units	20
Net sales	$ 2,752	$ 2,543
Contract with Customer, Liability [Abstract]
Contract with Customer, Liability	403		$ 395
Change in Contract with Customer, Liability [Abstract]
Contract with Customer, Liability, Revenue Recognized	36
United States
Disaggregation of Revenue [Line Items]
Net sales	1,586	1,489
International [Member]
Disaggregation of Revenue [Line Items]
Net sales	1,166	1,054
Emerging Markets [Member]
Disaggregation of Revenue [Line Items]
Net sales	317	273
Global Endoscopy (Endo) Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	499	442
Global Endoscopy (Endo) Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	280	256
Global Endoscopy (Endo) Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	219	186
Global Urology (Uro) Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	361	332
Global Urology (Uro) Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	257	237
Global Urology (Uro) Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	104	95
Global CRM Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	469	437
Global CRM Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	276	255
Global CRM Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	193	182
Global Electrophysiology (EP) Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	83	74
Global Electrophysiology (EP) Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	30	32
Global Electrophysiology (EP) Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	53	43
Global Neuromodulation (NM) Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	198	191
Global Neuromodulation (NM) Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	151	151
Global Neuromodulation (NM) Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	46	40
Global Interventional Cardiology (IC) Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	696	633
Global Interventional Cardiology (IC) Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	343	297
Global Interventional Cardiology (IC) Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	352	336
Global Peripheral Interventions (PI) Reporting Unit [Member]
Disaggregation of Revenue [Line Items]
Net sales	433	392
Global Peripheral Interventions (PI) Reporting Unit [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	238	224
Global Peripheral Interventions (PI) Reporting Unit [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	195	168
Specialty Pharmaceuticals [Member]
Disaggregation of Revenue [Line Items]
Net sales	13	41
Specialty Pharmaceuticals [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	10	37
Specialty Pharmaceuticals [Member] | International [Member]
Disaggregation of Revenue [Line Items]
Net sales	4	4
BSX Reportable Segments [Member]
Disaggregation of Revenue [Line Items]
Net sales	2,739	2,502
BSX Reportable Segments [Member] | United States
Disaggregation of Revenue [Line Items]
Net sales	1,577	1,452
BSX Reportable Segments [Member] | EMEA [Member]
Disaggregation of Revenue [Line Items]
Net sales	604	552
BSX Reportable Segments [Member] | APAC [Member]
Disaggregation of Revenue [Line Items]
Net sales	473	409
BSX Reportable Segments [Member] | Latin America and Canada [Member]
Disaggregation of Revenue [Line Items]
Net sales	$ 85	$ 89

XML

Changes in Other Comprehensive Income (Details) - USD ($) $ in Millions		3 Months Ended
	Mar. 01, 2021	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax		$ 182	$ (80)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax		(135)	(21)
Total other comprehensive income (loss)		47	(101)
Accumulated Other Comprehensive Income (Loss), Net of Tax		254	168	$ 207	$ 270
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax		48	(172)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax		(131)	(5)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax		(83)	(177)
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax		134	(35)	218	142
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax		133	92
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax		(4)	(17)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax		129	75
AOCI, Cash Flow Hedge, Cumulative Gain (Loss), after Tax		165	248	36	173
Other Comprehensive (Income) Loss, Defined Benefit Plan, before Reclassification Adjustment, after Tax		1	0
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, after Tax		0	0
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax		1	0
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax		$ (45)	$ (45)	$ (47)	$ (45)
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Specialty Pharmaceuticals [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax	$ (127)