Segment Reporting

6 Months Ended

Jun. 30, 2020

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, intangible asset impairment charges, acquisition/divestitures-related net charges/(credits), restructuring and restructuring-related net charges/(credits), certain EU Medical Device Regulation (MDR) implementation costs and litigation-related charges/(credits). Although we exclude these amounts from operating income of reportable segments, they are included in reported Income (loss) before income taxes on the unaudited condensed consolidated statements of operations and are included in the reconciliation below.

Following our acquisition of BTG, which closed during the third quarter of 2019, we have included BTG’s Interventional Medicine business within our Peripheral Interventions operating segment, within the Cardiovascular reportable segment. We present BTG’s Specialty Pharmaceuticals business as a standalone operating segment alongside our reportable segments.

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

	Three Months Ended June 30,						Six Months Ended June 30,
Net sales	2020			2019			2020			2019
MedSurg	$	576		$	818		$	1,350		$	1,584
Rhythm and Neuro	525			786			1,228			1,543
Cardiovascular	834			1,026			1,860			1,998
Total net sales of reportable segments	1,935			2,631			4,437			5,124
All other (Specialty Pharmaceuticals)	68			n/a			109			n/a
Consolidated net sales	$	2,003		$	2,631		$	4,546		$	5,124
	Three Months Ended June 30,						Six Months Ended June 30,
Income (loss) before income taxes	2020			2019			2020			2019
MedSurg	$	173		$	295		$	432		$	551
Rhythm and Neuro	32			167			131			322
Cardiovascular	186			301			385			577
Total operating income of reportable segments	391			763			947			1,449
All other (Specialty Pharmaceuticals)	49			n/a			75			n/a
Unallocated amounts:
Corporate expenses, including hedging activities	(189)			(91)			(222)			(140)
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	(125)			(127)			(327)			(64)
Amortization expense	(197)			(161)			(398)			(321)
Operating income (loss)	(71)			384			75			925
Other expense, net	(110)			(239)			(234)			(323)
Income (loss) before income taxes	$	(181)		$	145		$	(159)		$	602
Operating income of reportable segments as a percentage of net sales of reportable segments	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
MedSurg	30.1		%	36.1		%	32.0		%	34.8		%
Rhythm and Neuro	6.1		%	21.2		%	10.7		%	20.9		%
Cardiovascular	22.3		%	29.3		%	20.7		%	28.9		%