Segment Reporting

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE M – SEGMENT REPORTING

In the first quarter of 2022, we reorganized our operational structure in order to strengthen our category leadership in the markets we serve, and, in particular, benefit our Cardiology customers and patients. Following the reorganization, we have aggregated our core businesses into two reportable segments: MedSurg and Cardiovascular, each of which generates revenues from the sale of medical devices. In accordance with FASB ASC Topic 280, Segment Reporting, we identified our reportable segments based on the nature of our products, production processes, type of customer, selling and distribution methods and regulatory environment, as well as the economic characteristics of each of our operating segments.

We measure and evaluate our reportable segments based on their respective net sales, operating income, excluding intersegment profits, and operating income as a percentage of net sales, all excluding the impact of foreign currency. 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 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 within our consolidated statements of operations and are included in the reconciliation below. Refer to Note N – Revenue for net sales by reportable segment presented in accordance with U.S. GAAP.

A reconciliation of the totals reported for the reportable segments to the applicable line items within our accompanying consolidated statements of operations is as follows (in millions, except percentages). We have revised prior periods to conform to the current year presentation.

	Year Ended December 31,
Net sales	2022		2021		2020
MedSurg	$	5,057	$	4,616	$	3,844
Cardiovascular	8,161		7,212		5,913
Total net sales of reportable segments	13,218		11,828		9,756
Other(1)	(60)		13		219
Impact of foreign currency fluctuations	(476)		47		(65)
	$	12,682	$	11,888	$	9,913

	Year Ended December 31,
Income (loss) before income taxes	2022		2021		2020
MedSurg	$	1,625	$	1,524	$	1,156
Cardiovascular	2,113		1,888		1,043
Total operating income of reportable segments	3,737		3,412		2,198
Unallocated amounts:
Corporate expenses, including hedging activities and impact of foreign currency fluctuations on operating income of reportable segments	(436)		(406)		(424)
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	(789)		(1,070)		(1,208)
Amortization expense	(803)		(741)		(789)
Other(1)	(60)		4		143
Operating income (loss)	1,649		1,199		(80)
Other income (expense), net	(508)		(123)		1
Income (loss) before income taxes	$	1,141	$	1,076	$	(79)

(1) In 2022, amounts reflect sales reserves established for Italian government payback provisions, which are being disputed in the Italian court system. These amounts were not allocated to our reportable segments or considered by our CODM for resource allocation and decision-making purposes. In 2021 and 2020, amounts relate to our Specialty Pharmaceuticals business. On March 1, 2021, we completed the divestiture of the Specialty Pharmaceuticals business. Prior to the divestiture, we presented the Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments.

Operating income of reportable segments as a percentage of net sales of reportable segments	Year Ended December 31,
	2022		2021		2020
MedSurg	32.1	%	33.0	%	30.1	%
Cardiovascular	25.9	%	26.2	%	17.6	%

	Year Ended December 31,
Depreciation expense	2022		2021		2020
MedSurg	$	88	$	91	$	90
Cardiovascular	245		261		240
Total depreciation expense of reportable segments	333		352		330
Other(1)	—		—		3
Consolidated depreciation expense	$	333	$	352	$	333

	As of December 31,
Total assets	2022		2021
MedSurg	$	2,501	$	2,178
Cardiovascular	5,205		4,417
Total assets of reportable segments	7,706		6,595
Goodwill	12,920		11,988
Other intangible assets, net	5,902		6,121
All other corporate assets	5,941		7,525
	$	32,469	$	32,229

	As of December 31,
Long-lived assets	2022		2021
U.S.	$	1,241	$	1,190
Ireland	478		436
Costa Rica	246		185
Other countries	481		440
Property, plant and equipment, net	2,446		2,252
Goodwill	12,920		11,988
Other intangible assets, net	5,902		6,121
Operating lease right-of-use assets in Other long-term assets	386		435
	$	21,653	$	20,795