AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Patents, regulatory requirements and adoption suggest possible barriers, but their relative competitive protection is unestablished.
durability · — · No demonstrated duration of product superiority or economically important patent protection supports a durable moat assessment.
customer dependency · — · Physician familiarity and demand do not establish material dependence or costly switching.
erosion resilience · — · Growth persists alongside a realized competitive impact, but the passages cannot establish whether structural protection resists erosion.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · The positive pricing, volume and mix contribution cannot isolate observed pricing outcomes. Purchasing pressures do not prove realized price cuts.
retention · 2/4 · Indirect operating evidence shows continuing franchise demand across 2024–2026, balanced against competitive pressure and procedure deceleration. Repeat customer retention is not directly measured.
margin resilience · 2/4 · GAAP operating margin improved in 2025 and gross margin improved in first-half 2026 despite competition. Mix, tariff recovery and lower inventory adjustments materially limit attribution to durable pricing power.
contractual freedom · 1/4 · Existing tenders, price competition and increased customer purchasing power demonstrate constrained pricing discretion. Specific contract repricing rights are not supplied.
Predictability99
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 5.10
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 3.75
Financial strength68
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 69.62
- netDebtEbitGrade
- 47.57
- interestCoverageGrade
- 85.02
- currentRatioGrade
- 69.35
- Debt / FCF (x)
- 3.13
- Net debt / operating income (x)
- 2.62
- Interest coverage (x)
- 10.35
- Current ratio (x)
- 1.62
Capital allocation79
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 9.45
- 3-year average dilution (%)
- 1.15
- 3-year average SBC / revenue (%)
- 1.57
- cashConversionGrade
- 100.00
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half 2026 operating cash generation of $1.822 billion supports investment, but acquisitions, technology investments, capital spending and a $2 billion repurchase exceeded it alongside $1.675 billion of commercial paper proceeds. Share counts declined; investment returns and repurchase value creation remain unestablished.
incentive alignment · 3/4 · Actually granted awards include substantial performance-based equity and three-year relative shareholder return and service conditions. Broad exclusions in incentive metrics temper the assessment; management ownership and exceptional alignment are not established.
execution · 3/4 · Reported three-year organic growth, continuing commercialization and operating cash generation demonstrate strong execution through indirect operating evidence. Actual competitive impacts and flat first-half cash generation prevent an exceptional assessment.
governance · 3/4 · Actual independent director sessions, independent committees, external board evaluation and auditor-service oversight demonstrate functioning governance practices. Pending allegations are unresolved rather than proven misconduct; proposed shareholder-rights reforms receive no adoption credit.
Evidence
We own numerous U.S. and foreign patents and have numerous patent applications pending.
Intellectual property: existing patents and applications · Filed 17/02/2026
In 2025 and 2024, reported net sales growth was primarily driven by the growth of our Electrophysiology business unit, led by our Farapulse™ Pulsed Field Ablation (PFA) System, continued market penetration of Left Atrial Appendage Closure (LAAC) procedures with our WATCHMAN™ LAAC Devices, as well as our coronary therapies franchise led by our AGENT™ Drug-Coated Balloon.
Cardiovascular: 2025 and 2024 sales growth drivers · Filed 17/02/2026
In the second quarter and first six months of 2026, reported net sales growth was primarily driven by our coronary therapies franchise, led by our AGENT™ Drug-Coated Balloon, and our Electrophysiology business unit, led by our Farapulse™ Pulsed Field Ablation (PFA) System.
MD&A: second-quarter and first-half 2026 sales growth drivers · Filed 03/08/2026
The PMA approval process generally requires clinical data to support the safety and effectiveness of the device, and is generally more detailed, lengthier and more expensive than the 510(k) process.
Regulation: clinical data, time and expense of PMA approval · Filed 17/02/2026
Net sales for the second quarter and first six months of 2026 were impacted by increased competition within our Electrophysiology business unit and a deceleration of certain WATCHMAN™ procedures.
MD&A: realized competitive impact and WATCHMAN procedure deceleration · Filed 03/08/2026
No assurance can be made that any pending or future patent applications will result in the issuance of patents, that any current or future patents issued to, or licensed by, us will not be challenged or circumvented by our competitors, or that our patents will not be found invalid.
Intellectual property: patent challenges and circumvention risks · Filed 17/02/2026
In some circumstances, coverage or reimbursement may be granted on a conditional basis, and may be reduced, restricted or withdrawn if data, utilization, or reassessment do not support the expected clinical outcomes or economic value.
Reimbursement: conditional coverage and potential withdrawal · Filed 17/02/2026
We also compete on ease of use, comparative effectiveness, reliability and physician familiarity.
Competition: physician familiarity and product attributes · Filed 17/02/2026
We continue to experience pressures across many of our businesses due to competitive activity, increased market power of our customers as the health care industry consolidates, national and regional government tenders, economic pressures experienced by our customers, capacity shortages within health care facilities that have and may continue to negatively impact demand for our products, public perception of our products, and the impact of managed care organizations and other third-party payers.
Risk factors: ongoing competitive and customer purchasing pressures · Filed 17/02/2026
In the current environment of managed care, with economically motivated buyers, consolidation among health care providers, increasing prevalence and importance of regional and national tenders, increased competition and declining reimbursement rates, we are also required to compete on the basis of price, value, reliability and efficiency.
Competition: tenders, reimbursement and price competition · Filed 17/02/2026
Our primary competitors include Abbott Laboratories and Medtronic plc, as well as a wide range of medical device companies that sell a single or limited number of competitive products or participate in only a specific market segment.
2023 annual report: named primary competitors · Filed 20/02/2024
The following is a reconciliation of our gross profit margin and a description of the drivers of the changes from period to period: Three Months Six Months Period ended June 30, 2025 67.7% 68.2% Sales pricing, volume and mix 0.6% 0.7% Net impact of foreign currency fluctuations (0.4)% (0.6)% All other, including inventory charges and other period expenses 2.9% 1.8% Period ended June 30, 2026 70.7% 70.1% In the second quarter of 2026, the primary factors that impacted gross profit margin were increased sales of higher margin products, the benefit recognized in connection with the recovery of previously incurred tariffs and a decrease in inventory charges, slightly offset by an unfavorable impact from foreign currency.
MD&A: gross margin reconciliation and underlying drivers · Filed 03/08/2026
These factors also impacted gross profit margin during the first six months of 2026, along with a decrease in the impact of inventory step-up adjustments associated with acquisitions.
MD&A: first-half acquisition inventory adjustment benefit · Filed 03/08/2026
45 Table of Contents The following provides a summary and description of our net cash inflows (outflows): Six Months Ended June 30, (in millions) 2026 2025 Cash provided by (used for) operating activities $ 1,822 $ 1,827 Cash provided by (used for) investing activities (2,547) (1,626) Cash provided by (used for) financing activities (670) (107) Operating Activities During the first six months of 2026, cash provided by (used for) operating activities remained relatively flat compared to the prior year period primarily due to comparatively higher sales and corresponding operating income, offset by an increase in employee and working capital-related payments.
Liquidity: operating cash generation and working capital payments · Filed 03/08/2026
Investing Activities During the first six months of 2026, cash provided by (used for) investing activities included net cash payments of $718 million for acquisitions of multiple businesses, primarily related to Nalu Medical, Inc., net payments for investments and acquisitions of certain technologies of $1.501 billion, primarily related to the investment in MiRus LLC (MiRus), and purchases of property, plant and equipment and internal use software of $372 million.
Liquidity: actual acquisition, investment and capital spending · Filed 03/08/2026
Financing Activities During the first six months of 2026, cash provided by (used for) financing activities included net proceeds from the issuance of commercial paper of $1.675 billion, a $2.000 billion payment to repurchase shares of our common stock, and a $255 million payment of the remaining balance of 3.750% Senior Notes due March 2026.
Liquidity: commercial paper, completed repurchase payment and debt repayment · Filed 03/08/2026
NOTE I – WEIGHTED AVERAGE SHARES OUTSTANDING Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Weighted average shares outstanding — basic 1,470.2 1,479.9 1,477.6 1,478.5 Net effect of common stock equivalents 4.6 13.7 7.4 14.8 Weighted average shares outstanding - diluted 1,474.8 1,493.5 1,484.9 1,493.3 28 Table of Contents The following securities were excluded from the calculation of weighted average shares outstanding - diluted because their effect in the periods presented below would have been antidilutive: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Stock options outstanding(1) 5 1 3 1 (1) Represents stock options outstanding pursuant to our employee stock-based compensation plans with exercise prices that were greater than the average fair market value of our common stock for the related periods.
Note I: actual basic and diluted share counts · Filed 03/08/2026
2025 Long-Term Incentives: Fifty percent (50%) of our 2025 long-term incentive awards granted to our executive officers were in the form of performance-based RSUs pursuant to our 2025 Organic Net Sales Growth Performance Share Program (ONSG PSP) and 2025 relative Total Shareholder Return Performance Share Program (rTSR PSP).
Compensation discussion: granted 2025 performance-based equity awards · Filed 18/03/2026
The number of shares ultimately issued to the recipient is based on the total stockholder return (TSR) of our common stock as compared to the TSR of the common stock of the other companies in the S&P 500 Health Care Index over a three-year period.
Stock compensation: three-year relative shareholder return criteria · Filed 17/02/2026
In addition, in general, award recipients must remain employed by us throughout the three-year period to attain the full amount of the market-based RSUs that satisfied the market performance criteria.
Stock compensation: service requirements for market-based awards · Filed 17/02/2026
(2)As used in the 2025 ABP, (i) Adjusted Net Sales excludes foreign currency fluctuations and the impact of net sales from certain acquisitions completed after the establishment of the internal financial plan, as applicable, (ii) Adjusted EPS excludes the impact of certain charges (credits) which may include amortization expense, goodwill and other intangible asset impairment charges, acquisition/divestiture-related net charges (credits), investment portfolio net losses (gains) and impairments, restructuring and restructuring-related net charges (credits), litigation-related net charges (credits), European Union (EU) Medical Device Regulation (MDR) implementation costs, debt extinguishment net charges, deferred tax expenses (benefits) and discrete tax items and (iii) Adjusted OIM reflects the Company’s adjusted operating income (GAAP revenue less cost of goods sold less operating expenses, adjusted for certain items consistent with those excluded to determine Adjusted EPS) as a percentage of net sales.
Compensation discussion: exclusions from incentive performance metrics · Filed 18/03/2026
ABP Financial Metrics 2025 Reported Results $20.074 billion GAAP Net Sales $1.94 GAAP Net Income Per Share 18.0% GAAP Operating Income Margin 2025 Adjusted Results for ABP $ 19.931 billion Adjusted Net Sales(1)(2) $3.06 Adjusted Net Income Per Share (Adjusted EPS)(1)(2) 28.0% Adjusted Operating Income Margin(1)(2) rTSR and ONSG PSP Financial Metrics 119.29% 3-year rTSR(4) For 2023 rTSR PSP 16.6% Average GAAP Net Sales Growth 2023 - 2025 14.8% Average Organic Net Sales Growth(1)(2) 2023 - 2025 For 2023 ONSG PSP(3) (1)Adjusted Net Sales, Adjusted EPS, Adjusted OIM and ONSG are non-GAAP financial measures.
Compensation discussion: reported financial results and three-year organic growth · Filed 18/03/2026
During 2025, our independent directors met in executive session without non-independent directors five times.
Governance: independent director executive sessions held in 2025 · Filed 18/03/2026
All of the members of the Audit Committee, Compensation Committee, and Nominating and Governance Committee meet the applicable independence requirements of the NYSE and the SEC.
Governance: committee independence requirements · Filed 18/03/2026
In 2025, the Nominating and Governance Committee engaged a third-party facilitator to conduct interviews with each member of the Board, informed by priority areas identified in consultation with Board leadership.
Governance: completed third-party board evaluation interviews · Filed 18/03/2026
The Audit Committee approved all of Ernst & Young LLP’s services for 2024 and 2025 and, in doing so, considered whether the provision of such services is compatible with maintaining independence.
Audit oversight: actual approval of auditor services · Filed 18/03/2026
On March 23, 2026, the Company received a letter dated March 18, 2026, from a purported Company shareholder, Roberta Poznick, demanding that the Company’s Board of Directors take action against certain current and former officers and directors and other unidentified individuals and entities relating to substantially the same set of factual allegations as those asserted in the related securities class action case above.
Contingencies: shareholder demand concerning securities allegations · Filed 03/08/2026
The following is a reconciliation of Operating Income Margin (OIM) prepared in accordance with GAAP to Adjusted OIM as used in our Annual Bonus Plan: Adjusted Operating Income Margin 2025 2024 Operating Income Margin, as reported 18.0 % 15.5 % Non-GAAP adjustments 10.0 % 11.5 % Operating Income Margin, adjusted 28.0 % 27.0 % Use of Non-GAAP Financial Measures To supplement our consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures.
Annex A: 2024 and 2025 GAAP and adjusted operating margins · Filed 18/03/2026
