Segment Reporting

12 Months Ended

Dec. 31, 2023

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. We have revised prior periods to conform to the current year presentation. 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 based on internally-derived standard currency exchange rates to exclude the impact of foreign currency, which may be updated from year to year. 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 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 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). Prior period amounts have been restated at constant currency to conform to the current year presentation.

	Year Ended December 31,
Net sales	2023		2022		2021
MedSurg	$	5,320	$	4,805	$	4,389
Cardiovascular	8,630		7,599		6,721
Total net sales of reportable segments	13,949		12,404		11,109
Other(1)	—		(60)		12
Impact of foreign currency fluctuations	291		338		766
	$	14,240	$	12,682	$	11,888

	Year Ended December 31,
Income (loss) before income taxes	2023		2022		2021
MedSurg	$	1,796	$	1,458	$	1,368
Cardiovascular	2,235		1,748		1,572
Total operating income of reportable segments	4,031		3,206		2,940
Unallocated amounts:
Corporate expenses, including hedging activities and impact of foreign currency fluctuations on operating income of reportable segments	(293)		96		67
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	(567)		(789)		(1,070)
Amortization expense	(828)		(803)		(741)
Other(1)	—		(60)		3
Operating income (loss)	2,343		1,649		1,199
Other income (expense), net	(358)		(508)		(123)
Income (loss) before income taxes	$	1,985	$	1,141	$	1,076

(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, 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,
	2023		2022		2021
MedSurg	33.8	%	30.3	%	31.2	%
Cardiovascular	25.9	%	23.0	%	23.4	%

	Year Ended December 31,
Depreciation expense	2023		2022		2021
MedSurg	$	103	$	88	$	91
Cardiovascular	263		245		261
Consolidated depreciation expense	$	367	$	333	$	352

	As of December 31,
Total assets	2023		2022
MedSurg	$	2,888	$	2,501
Cardiovascular	5,988		5,205
Total assets of reportable segments	8,876		7,706
Goodwill	14,387		12,920
Other intangible assets, net	6,003		5,902
All other corporate assets	5,869		5,941
	$	35,136	$	32,469

	As of December 31,
Long-lived assets	2023		2022
U.S.	$	1,300	$	1,241
Ireland	598		478
Costa Rica	373		246
Other countries	587		481
Property, plant and equipment, net	2,859		2,446
Goodwill	14,387		12,920
Other intangible assets, net	6,003		5,902
Operating lease right-of-use assets in Other long-term assets	439		386
	$	23,688	$	21,653