Supplemental Guarantor Financial Information

In October 2014, Halyard Health, Inc. (referred to below as “Parent”) issued the Notes (described in Note 8, “Debt”). The Notes are guaranteed, jointly and severally by each of our domestic subsidiaries that guarantees the Senior Credit Facilities (each, a “Guarantor Subsidiary” and collectively, the “Guarantor Subsidiaries”). The guarantees are full and unconditional, subject to certain customary release provisions as defined in the Indenture dated October 17, 2014. Each Guarantor Subsidiary is directly or indirectly 100%-owned by Halyard Health, Inc. Each of the guarantees of the Notes is a general unsecured obligation of each Guarantor and ranks equally in right of payment with all existing and future indebtedness and all other obligations (except subordinated indebtedness) of each Guarantor.

The following condensed consolidating balance sheets as of December 31, 2017 and 2016 and the condensed consolidating statements of income and cash flows for the years ended December 31, 2017, 2016 and 2015 provide condensed consolidating financial information for Halyard Health, Inc. (“Parent”), the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the Parent and its subsidiaries on a consolidating basis.

The Parent and the Guarantor Subsidiaries use the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation. Eliminating entries in the following condensed consolidating financial information represent adjustments to (i) eliminate intercompany transactions between or among the Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries and (ii) eliminate the investments in subsidiaries.

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME AND COMPREHENSIVE INCOME STATEMENTS

(in millions)



	Year Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	679.2		$	306.9		$	(374.5	)	$	611.6
Cost of products sold	—			385.7			263.5			(374.5		)	274.7
Gross Profit	—			293.5			43.4			—			336.9
Research and development expenses	—			38.2			—			—			38.2
Selling and general expenses	29.9			249.7			42.1			—			321.7
Other expense (income), net	0.7			34.5			(15.1		)	—			20.1
Operating (Loss) Profit	(30.6		)	(28.9		)	16.4			—			(43.1		)
Interest income	0.9			0.1			4.5			(3.0		)	2.5
Interest expense	(32.3		)	(2.2		)	(0.1		)	3.0			(31.6		)
(Loss) Income Before Income Taxes	(62.0		)	(31.0		)	20.8			—			(72.2		)
Income tax benefit (provision)	20.0			23.2			(3.1		)	—			40.1
Equity in earnings of consolidated subsidiaries	125.1			32.6			—			(157.7		)	—
Net Income (Loss) from Continuing Operations	83.1			24.8			17.7			(157.7		)	(32.1		)
(Loss) Income on discontinued operations, net of tax	(3.8		)	86.0			29.2			—			111.4
Net Income (Loss)	79.3			110.8			46.9			(157.7		)	79.3
Total other comprehensive income (loss), net of tax	18.8			13.1			18.3			(31.4		)	18.8
Comprehensive Income (Loss)	$	98.1		$	123.9		$	65.2		$	(189.1	)	$	98.1

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME AND COMPREHENSIVE INCOME STATEMENTS

(in millions)



	Year Ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	625.4		$	250.0		$	(309.2	)	$	566.2
Cost of products sold	—			356.7			221.5			(309.2		)	269.0
Gross Profit	—			268.7			28.5			—			297.2
Research and development expenses	—			38.0			0.4			—			38.4
Selling and general expenses	37.2			274.2			34.8			—			346.2
Other (income) expense, net	(0.8		)	36.4			(17.5		)	1.6			19.7
Operating (Loss) Profit	(36.4		)	(79.9		)	10.8			(1.6		)	(107.1		)
Interest income	0.3			0.1			2.5			(2.3		)	0.6
Interest expense	(33.1		)	(1.7		)	(0.2		)	2.3			(32.7		)
(Loss) Income Before Income Taxes	(69.2		)	(81.5		)	13.1			(1.6		)	(139.2		)
Income tax benefit (provision)	25.5			33.9			(3.5		)	—			55.9
Equity in earnings of consolidated subsidiaries	85.3			22.3			—			(107.6		)	—
Income (Loss) from Continued Operations	41.6			(25.3		)	9.6			(109.2		)	(83.3		)
(Loss) Income from discontinued operations, net of tax	(1.8		)	108.6			16.3			—			123.1
Net Income (Loss)	39.8			83.3			25.9			(109.2		)	39.8
Total other comprehensive loss, net of tax	(6.9		)	(6.3		)	(7.2		)	13.5			(6.9		)
Comprehensive Income	$	32.9		$	77.0		$	18.7		$	(95.7	)	$	32.9

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED COMBINED CONSOLIDATING INCOME AND COMPREHENSIVE INCOME STATEMENTS

(in millions)



	Year Ended December 31, 2015
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Sales	$	—		$	591.2		$	266.4		$	(348.6	)	$	509.0
Cost of products sold	—			338.8			261.0			(348.6		)	251.2
Gross Profit	—			252.4			5.4			—			257.8
Research and development expenses	—			27.6			—			—			27.6
Selling and general expenses	30.6			274.4			44.7			—			349.7
Other (income) expense, net	(0.8		)	26.9			(9.9		)	—			16.2
Operating Loss	(29.8		)	(76.5		)	(29.4		)	—			(135.7		)
Interest income	0.3			—			3.1			(3.1		)	0.3
Interest expense	(33.8		)	(2.1		)	(0.3		)	3.1			(33.1		)
Loss Before Income Taxes	(63.3		)	(78.6		)	(26.6		)	—			(168.5		)
Income tax benefit (provision)	24.3			44.7			(1.7		)	—			67.3
Equity in (loss) earnings of consolidated subsidiaries	(389.5		)	22.4			—			367.1			—
(Loss) Income from Continued Operations	(428.5		)	(11.5		)	(28.3		)	367.1			(101.2		)
Income (Loss) from discontinued operations, net of tax	2.2			(366.4		)	39.1			—			(325.1		)
Net (Loss) Income	(426.3		)	(377.9		)	10.8			367.1			(426.3		)
Total other comprehensive loss, net of tax	—			(0.1		)	(24.0		)	—			(24.1		)
Comprehensive (Loss) Income	$	(426.3	)	$	(378.0	)	$	(13.2	)	$	367.1		$	(450.4	)

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(in millions)



	As of December 31, 2017
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	114.5	$	16.0	$	89.2	$	—		$	219.7
Accounts receivable, net	1.1		623.0		266.3		(687.4		)	203.0
Inventories	—		76.0		15.1		—			91.1
Prepaid and other current assets	0.6		11.7		2.1		—			14.4
Assets held for sale	0.3		546.7		85.5		—			632.5
Total Current Assets	116.5		1,273.4		458.2		(687.4		)	1,160.7
Property, Plant and Equipment, Net	—		92.9		17.0		—			109.9
Investment in Consolidated Subsidiaries	2,154.3		403.2		—		(2,557.5		)	—
Goodwill	—		738.1		26.6		—			764.7
Other Intangible Assets, net	—		139.5		9.4		—			148.9
Other Assets	0.3		6.0		5.4		—			11.7
TOTAL ASSETS	$	2,271.1	$	2,653.1	$	516.6	$	(3,244.9	)	$	2,195.9

LIABILITIES AND EQUITY
Current Liabilities
Current portion of long-term debt	$	39.8	$	—	$	—	$	—		$	39.8
Trade accounts payable	454.0		347.0		49.8		(679.6		)	171.2
Accrued expenses	11.6		113.9		27.4		(8.0		)	144.9
Liabilities held for sale	—		7.8		26.1		—			33.9
Total Current Liabilities	505.4		468.7		103.3		(687.6		)	389.8
Long-Term Debt	541.1		—		—		—			541.1
Other Long-Term Liabilities	9.2		36.1		4.3		—			49.6
Total Liabilities	1,055.7		504.8		107.6		(687.6		)	980.5
Total Equity	1,215.4		2,148.3		409.0		(2,557.3		)	1,215.4
TOTAL LIABILITIES AND EQUITY	$	2,271.1	$	2,653.1	$	516.6	$	(3,244.9	)	$	2,195.9

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(in millions)



	As of December 31, 2016
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	54.2	$	9.5	$	50.0	$	—		$	113.7
Accounts receivable, net	3.1		552.5		239.9		(607.0		)	188.5
Inventories	—		69.2		11.5		—			80.7
Prepaid and other current assets	5.0		10.1		1.8		(0.3		)	16.6
Assets held for sale	—		162.3		31.7		—			194.0
Total Current Assets	62.3		803.6		334.9		(607.3		)	593.5
Property, Plant and Equipment, Net	—		96.7		12.6		—			109.3
Investment in Consolidated Subsidiaries	2,029.5		328.7		—		(2,358.2		)	—
Goodwill	—		736.1		26.2		—			762.3
Other Intangible Assets, net	—		159.5		8.7		—			168.2
Other Assets	0.7		7.7		3.2		—			11.6
Assets Held for Sale	0.3		380.0		46.6		—			426.9
TOTAL ASSETS	$	2,092.8	$	2,512.3	$	432.2	$	(2,965.5	)	$	2,071.8

LIABILITIES AND EQUITY
Current Liabilities
Trade accounts payable	$	398.3	$	325.9	$	38.3	$	(601.9	)	$	160.6
Accrued expenses	11.1		108.5		24.2		(5.4		)	138.4
Liabilities held for sale	—		8.3		17.1		—			25.4
Total Current Liabilities	409.4		442.7		79.6		(607.3		)	324.4
Long-Term Debt	579.0		—		—		—			579.0
Other Long-Term Liabilities	1.9		52.9		4.4		—			59.2
Liabilities Held for Sale	—		1.5		5.2		—			6.7
Total Liabilities	990.3		497.1		89.2		(607.3		)	969.3
Total Equity	1,102.5		2,015.2		343.0		(2,358.2		)	1,102.5
TOTAL LIABILITIES AND EQUITY	$	2,092.8	$	2,512.3	$	432.2	$	(2,965.5	)	$	2,071.8

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in millions)



	Year Ended December 31, 2017
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Cash (Used in) Provided by Operating Activities	$	(43.3	)	$	137.2		$	50.3		$	—		$	144.2
Investing Activities
Capital expenditures	—			(32.4		)	(10.8		)	—			(43.2		)
Proceeds from dispositions of property	—			0.1			—			—			0.1
Intercompany contributions	—			(98.8		)	—			98.8			—
Cash (Used in) Provided by Investing Activities	—			(131.1		)	(10.8		)	98.8			(43.1		)
Financing Activities
Intercompany contributions	101.4			—			(2.6		)	(98.8		)	—
Purchase of treasury stock	(2.5		)	—			—			—			(2.5		)
Proceeds and excess tax benefits from the exercise of stock options	4.7			—			—			—			4.7
Cash Provided by (Used in) Financing Activities	103.6			—			(2.6		)	(98.8		)	2.2
Effect of Exchange Rate on Cash and Cash Equivalents	—			0.4			2.3			—			2.7
Increase in Cash and Cash Equivalents	60.3			6.5			39.2			—			106.0
Cash and Cash Equivalents, Beginning of Period	54.2			9.5			50.0			—			113.7
Cash and Cash Equivalents, End of Period	$	114.5		$	16.0		$	89.2		$	—		$	219.7

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in millions)



	Year Ended December 31, 2016
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Cash (Used in) Provided by Operating Activities	$	(33.0	)	$	207.7		$	15.8		$	(1.7	)	$	188.8
Investing Activities
Capital expenditures	—			(22.7		)	(6.4		)	—			(29.1		)
Acquisition of business, net of cash acquired	(175.0		)	—			—			—			(175.0		)
Proceeds from property dispositions	—			3.2			—			—			3.2
Intercompany contributions	0.5			(177.9		)	2.7			174.7			—
Cash (Used in) Provided by Investing Activities	(174.5		)	(197.4		)	(3.7		)	174.7			(200.9		)
Financing Activities
Intercompany contributions	170.8			—			(0.3		)	(170.5		)	—
Line of credit facility proceeds	72.0			—			—			—			72.0
Line of credit facility repayments	(72.0		)	—			—			—			(72.0		)
Debt issuance costs	(0.9		)	—			—			—			(0.9		)
Purchase of treasury stock	(0.9		)	—			—			—			(0.9		)
Proceeds and excess tax benefits from the exercise of stock options	0.4			—			—			—			0.4
Cash Provided by (Used in) Financing Activities	169.4			—			(0.3		)	(170.5		)	(1.4		)
Effect of Exchange Rate on Cash and Cash Equivalents	—			(0.8		)	(1.5		)	—			(2.3		)
(Decrease) Increase in Cash and Cash Equivalents	(38.1		)	9.5			10.3			2.5			(15.8		)
Cash and Cash Equivalents, Beginning of Period	92.3			—			39.7			(2.5		)	129.5
Cash and Cash Equivalents, End of Period	$	54.2		$	9.5		$	50.0		$	—		$	113.7

HALYARD HEALTH, INC. AND SUBSIDIARIES

CONDENSED COMBINED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in millions)



	Year Ended December 31, 2015
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Cash (Used in) Provided by Operating Activities	$	(44.7	)	$	110.5		$	34.3		$	(2.5	)	$	97.6
Investing Activities
Capital expenditures	—			(61.3		)	(9.1		)	—			(70.4		)
Proceeds from property dispositions	—			—			7.8			—			7.8
Intercompany contributions	39.9			(53.1		)	1.3			11.9			—
Cash Provided by (Used in) Investing Activities	39.9			(114.4		)	—			11.9			(62.6		)
Financing Activities
Intercompany contributions	46.5			—			(34.6		)	(11.9		)	—
Debt repayments	(51.0		)	—			—			—			(51.0		)
Purchase of treasury stock	(1.0		)	—			—			—			(1.0		)
Proceeds and excess tax benefits from the exercise of stock options	1.4			—			—			—			1.4
Cash Used in Financing Activities	(4.1		)	—			(34.6		)	(11.9		)	(50.6		)
Effect of Exchange Rate on Cash and Cash Equivalents	—			—			(3.9		)	—			(3.9		)
Decrease in Cash and Cash Equivalents	(8.9		)	(3.9		)	(4.2		)	(2.5		)	(19.5		)
Cash and Cash Equivalents, Beginning of Period	101.2			3.9			43.9			—			149.0
Cash and Cash Equivalents, End of Period	$	92.3		$	—		$	39.7		$	(2.5	)	$	129.5