BUSINESS OPTIMIZATION CHARGES

9 Months Ended

Sep. 30, 2024

Restructuring and Related Activities [Abstract]

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. The related costs of those actions consisted primarily of employee termination costs, implementation costs, contract termination costs, and asset impairments. We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, of approximately $5 million through the completion of initiatives that are currently underway. We continue to pursue cost savings initiatives, including those related to our newly implemented operating model, intended to simplify and streamline our operations, and to the extent further cost savings opportunities are identified (including after completion of the pending Kidney Care sale), we would incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three and nine months ended September 30, 2024 and 2023, we recorded the following charges related to business optimization programs.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2024		2023		2024		2023
Restructuring charges	$	15	$	41	$	36	$	140
Costs to implement business optimization programs	3		7		13		27

Total business optimization charges	$	18	$	48	$	49	$	167

For segment reporting purposes, business optimization charges are unallocated expenses.

Costs to implement business optimization programs for the three and nine months ended September 30, 2024 and 2023, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. These costs were primarily included within cost of sales and SG&A expense.

During the three and nine months ended September 30, 2024 and 2023, we recorded the following restructuring charges.


	Three months ended September 30, 2024
(in millions)	COGS		SG&A		Total
Employee termination costs	$	2	$	10	$	12
Contract termination and other costs	—		3		3

Total restructuring charges	$	2	$	13	$	15


	Three months ended September 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	6	$	29	$	4	$	39
Contract termination and other costs	—		2		—		2

Total restructuring charges	$	6	$	31	$	4	$	41


	Nine months ended September 30, 2024
(in millions)	COGS		SG&A		Total
Employee termination costs	$	4	$	25	$	29
Contract termination and other costs	1		6		7

Total restructuring charges	$	5	$	31	$	36


	Nine months ended September 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	25	$	89	$	10	$	124
Contract termination and other costs	—		5		—		5
Asset impairments	3		8		—		11
Total restructuring charges	$	28	$	102	$	10	$	140

For the three and nine months ended September 30, 2024, $7 million and $14 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to business optimization initiatives within our Healthcare Systems and Technologies segment. Additionally, for the nine months ended September 30, 2024, $7 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to our recent implementation of a new operating model intended to simplify and streamline our operations.

For the three and nine months ended September 30, 2023, $11 million and $79 million, respectively, of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to the implementation of our previously announced new operating model intended to simplify and streamline our operations.

The following table summarizes activity in the liability related to our restructuring initiatives.


(in millions)
Liability balance as of December 31, 2023	$	95
Charges	42
Payments	(59)
Reserve adjustments	(8)
Currency translation	4
Liability balance as of September 30, 2024	$	74

Substantially all of our restructuring liabilities as of September 30, 2024 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2025.