We provide warranty coverage to our customers as part of customary practices in the market to provide assurance that the products we sell comply with agreed-upon specifications. We provide estimated product warranty expenses when we sell the related products. Warranty accruals are estimates that are based on the best available information, mostly historical claims experience, therefore claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows.

In the normal course of our business, we are involved from time to time in various arbitrations; class actions; commercial, intellectual property, and product liability litigation; government investigations; investigations by competition/antitrust authorities; and other legal, regulatory, or governmental actions, including the significant matter described below that could have a material impact on our results of operations and cash flows. In many proceedings, including the specific matter described below, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the size or range of the possible loss, and accruals for legal matters are not recorded until a loss for a particular matter is considered probable and reasonably estimable. Given the nature of legal matters and the complexities involved, it is often difficult to predict and determine a meaningful estimate of loss or range of loss until we know, among other factors, the particular claims involved, the likelihood of success of our defenses to those claims, the damages or other relief sought, how discovery or other procedural considerations will affect the outcome, the settlement posture of other parties, and other factors that may have a material effect on the outcome. For such matters, unless otherwise specified, we do not believe it is possible to provide a meaningful estimate of loss at this time. Moreover, it is not uncommon for legal matters to be resolved over many years, during which time relevant developments and new information must be continuously evaluated.

In 2017, a number of U.S. Service members, civilians, and their families brought a complaint in the U.S. District Court for the District of Columbia (the “District Court”) against a number of pharmaceutical and medical device companies, including GE HealthCare and certain affiliates, alleging that the defendants violated the U.S. Anti-Terrorism Act. The complaint seeks monetary relief and alleges that the defendants provided funding for an Iraqi terrorist organization through their sales practices pursuant to pharmaceutical and medical device contracts with the Iraqi Ministry of Health. In July 2020, the District Court granted defendants’ motions to dismiss and dismissed all of the plaintiffs’ claims. In January 2022, a panel of the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”) reversed the District Court’s decision. In February 2022, the defendants requested review of the decision by all the judges on the Court of Appeals (an “en banc” review). In February 2023, the Court of Appeals denied this request. In June 2023, defendants petitioned the Supreme Court to review the Court of Appeals’ decision. In June 2024, the Supreme Court vacated the Court of Appeals’ decision and remanded the case to the Court of Appeals for further consideration. In January 2026, the Court of Appeals reversed the District Court’s decision to dismiss the complaint and remanded the case for further proceedings. In April 2026, the Court of Appeals denied defendants’ request for an en banc review of the Court of Appeals’ decision. The parties are now in the discovery process.

In connection with the Tax Matters Agreement with GE as described in Note 19, “Related Parties and Transition Services Agreement” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, we have been informed that the Internal Revenue Service (“IRS”) may assert a material amount of additional taxes related to an ongoing IRS audit of the GE consolidated U.S. income tax returns, in which we are included, for the years 2016-2020. Any tax obligations would be allocated among the Company and GE, in accordance with the Tax Matters Agreement. A final resolution of this matter could be time-consuming and is not likely within the next 12 months. An unfavorable resolution of this matter and related allocation of additional tax liability, which is not reasonably estimable at this time, could result in additional material indemnification obligations due to GE for which we have not accrued a liability.

In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”) does not authorize the President to impose tariffs thereunder. In April 2026, U.S. Customs and Border Protection announced a new administrative process for importers to obtain refunds of certain tariffs imposed under IEEPA.

The Company has submitted eligible refund claims through the established refund process and recognizes a receivable for anticipated IEEPA tariff refunds when management concludes that recovery of previously recognized tariff costs is probable and the amount of the recovery can be reasonably estimated. As of June 30, 2026, the Company received $107 million of refunds and recorded a $38 million receivable for submitted claims not yet reimbursed. The receivable is included within Receivables - net of allowances in the Condensed Consolidated Statements of Financial Position. In the second quarter of 2026, we recognized pre-tax benefits from tariff refunds of $106 million related to tariffs incurred in 2025 and $23 million related to tariffs incurred in 2026, all of which are recorded within Cost of products sold and Cost of services sold in the Condensed Consolidated Statements of Income.

While the Company believes recovery of the submitted claims is probable and estimable, the ultimate amount and timing of recovery remain subject to validation and administrative processing procedures, as well as potential legal, regulatory, and administrative developments. Accordingly, actual recoveries could differ from recorded amounts.