Mayo Clinic

Consolidated Financial Report

Years Ended December 31, 2024 and 2023
 Mayo Clinic
Contents
Independent auditor's report 1

Consolidated financial statements

Consolidated statements of financial position 4

Consolidated statements of activities 5

Consolidated statements of cash flows 6

Notes to consolidated financial statements 7

 Ernst & Young LLP Tel: +1 612 343 1000
Suite 500 ey.com
700 Nicollet Mall
Minneapolis, MN 55402

Report of Independent Auditors

The Board of Trustees

Mayo Clinic

Opinion

We have audited the consolidated financial statements of Mayo Clinic (“the Clinic”), which
comprise the consolidated statements of financial position as of December 31, 2024 and 2023, and
the related consolidated statements of activities and cash flows for the years then ended, and the
related notes (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of the Clinic at December 31, 2024 and 2023, and the results of its operations
and its cash flows for the years then ended in accordance with accounting principles generally
accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United
States of America (GAAS). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Clinic and to meet our other ethical responsibilities in accordance
with the relevant ethical requirements relating to our audits. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for
the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free of material misstatement, whether due to fraud
or error.

In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the Clinic’s
ability to continue as a going concern for one year after the date that the financial statements are
issued.

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 Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will
always detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in
the aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Clinic’s internal control. Accordingly, no such
opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the Clinic’s ability to continue as a going
concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.

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 Other Information

Management is responsible for the other information. The other information comprises the
Management Discussion and Analysis but does not include the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other
information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information
and the financial statements, or the other information otherwise appears to be materially misstated.
If, based on the work performed, we conclude that an uncorrected material misstatement of the
other information exists, we are required to describe it in our report.

March 3, 2025


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Consolidated Statements of Financial Position
December 31, 2024 and 2023 (In Millions)

2024 2023
Assets

Current assets:
Cash and cash equivalents $ 48 $ 80
Accounts receivable for medical services 2,123 1,976
Other receivables 707 787
Other current assets 456 391
Total current assets 3,334 3,234

Investments 20,958 18,834

Other long-term assets 4,614 3,428
Property, plant, and equipment, net 7,099 6,431

Total assets $ 36,005 $ 31,927

Liabilities and net assets

Current liabilities:
Accounts payable $ 778 $ 847
Accrued payroll 1,004 873
Accrued employee benefits 178 181
Deferred revenue 88 65
Long-term variable-rate debt 620 620
Other current liabilities 629 491
Total current liabilities 3,297 3,077

Long-term debt, net of current portion 3,989 4,098

Accrued pension and postretirement benefits, net of current portion 827 813
Other long-term liabilities 2,435 2,303
Total liabilities 10,548 10,291

Net assets:
Without donor restrictions 19,644 16,240
With donor restrictions 5,813 5,396
Total net assets 25,457 21,636
Total liabilities and net assets $ 36,005 $ 31,927

See notes to consolidated financial statements.

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Consolidated Statements of Activities
Years Ended December 31, 2024 and 2023 (In Millions)

2024 2023
Without With Without With
Donor Donor Donor Donor
Restrictions Restrictions Total Restrictions Restrictions Total
Revenue, gains and other support:
Medical service revenue $ 16,554 $ — $ 16,554 $ 15,077 $ — $ 15,077
Grants and contracts 772 — 772 703 — 703
Investment return allocated to current activities 432 46 478 479 57 536
Contributions available for current activities 252 288 540 127 301 428
Other 1,451 — 1,451 1,200 — 1,200
Net assets released from restrictions 444 (444) — 442 (442) —
Total revenue, gains and other support 19,905 (110) 19,795 18,028 (84) 17,944

Expenses:
Salaries and benefits 10,482 — 10,482 9,667 — 9,667
Supplies and services 6,731 — 6,731 5,950 — 5,950
Depreciation and amortization 685 — 685 663 — 663
Facilities 415 — 415 388 — 388
Finance and investment 189 — 189 192 — 192
Total expenses 18,502 — 18,502 16,860 — 16,860
Income (loss) from current activities 1,403 (110) 1,293 1,168 (84) 1,084
Noncurrent and other items:
Contributions not available for current activities, net (16) 176 160 (17) 190 173
Unallocated investment (loss) return, net 961 351 1,312 788 227 1,015
Income tax expense (41) — (41) (41) — (41)
Benefit Credit 324 — 324 344 — 344
Other (142) — (142) (162) — (162)
Total noncurrent and other items 1,086 527 1,613 912 417 1,329
Increase (decrease) in net assets before other 2,489 417 2,906 2,080 333 2,413
changes in net assets
Pension and other postretirement benefit adjustments 930 — 930 (648) — (648)
Purchase of non-controlling interest (15) — (15) — — —
Increase (decrease) in net assets 3,404 417 3,821 1,432 333 1,765
Net assets at beginning of year 16,240 5,396 21,636 14,808 5,063 19,871
Net assets at end of year $ 19,644 $ 5,813 $ 25,457 $ 16,240 $ 5,396 $ 21,636

See notes to consolidated financial statements.

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Consolidated Statements of Cash Flows
Years Ended December 31, 2024 and 2023 (In Millions)

2024 2023
Cash flows from operating activities:
Cash from medical services $ 15,418 $ 14,016
Cash from external lab services 989 927
Cash from grants and contracts 785 671
Cash from benefactors 445 373
Cash from other activities 1,440 1,051
Cash for salaries and benefits (10,236) (9,576)
Cash for supplies, services, and facilities (7,225) (6,212)
Interest and dividends received 367 303
Interest paid (177) (173)
Income taxes paid (26) (62)
Net cash provided by operating activities 1,780 1,318

Cash flows from investing activities:

Purchase of property, plant, and equipment (1,341) (1,164)
Purchases of investments (21,205) (13,766)
Sales and maturities from investments 20,503 13,467
Investment in unconsolidated entities 75 (9)
Net cash used in investing activities (1,968) (1,472)

Cash flows from financing activities:

Restricted gifts, bequests, and other 198 213
Purchase of non-controlling interest (15) —
Payment of long-term debt (18) (36)
Payment on leases (9) (7)
Net cash provided by financing activities 156 170
Net increase (decrease) in cash and cash equivalents (32) 16
Cash and cash equivalents at beginning of year 80 64
Cash and cash equivalents at end of year $ 48 $ 80

See notes to consolidated financial statements.

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 1. Organization and Summary of Significant Accounting Policies

Organization: Mayo Clinic and its Arizona, Florida, Iowa, Minnesota, Wisconsin and international
affiliates (the Clinic) provide comprehensive medical care and education in clinical medicine and medical
sciences and conduct extensive programs in medical research. The Clinic also provides hospital and
outpatient services, and at each major location, the clinical practice is closely integrated with advanced
education and research programs. The Clinic and most of its subsidiaries have been determined to qualify
as tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code (the Code) and as a
public charity under Section 509(a)(2) of the Code.

Basis of presentation: Included in the Clinic’s consolidated financial statements are all of its wholly
owned or wholly controlled subsidiaries. All significant intercompany transactions have been eliminated in
consolidation. In addition, these statements follow generally accepted accounting principles applicable to
the not-for-profit industry as described in the Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 958, Not-for Profit Entities.

Use of estimates: The preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

New Accounting Standards:

Effective January 1, 2023, the Clinic adopted FASB Accounting Standard Update (ASU) No. 2016-13,
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments. This ASU provides financial statement users with more decision-useful information about the
expected credit losses on financial instruments and other documents to extend credit held by a reporting
entity. The adoption of this ASU did not materially impact the consolidated financial statements.

Effective January 1, 2024, the Clinic adopted FASB Accounting Standard Update (ASU) No. 2023-01,
Leases - Common Control Arrangements. This ASU requires entities determine whether a related party
arrangement between entities under common control is a lease and requires that leasehold improvements
have an amortization period consistent with the shorter of the remaining lease term and the useful life of
the improvements for a lease between entities under common control. The adoption of this ASU did not
materially impact the consolidated financial statements.

Cash and cash equivalents: Cash and cash equivalents include currency on hand, demand deposits
with banks or other financial institutions, and short-term investments with maturities of three months or
less from the date of purchase, which are not managed by the Clinic’s investment managers.

Accounts receivable for medical services: Accounts receivable for medical services are based upon
the estimated amounts expected to be paid from patients and third-party payors.

Inventories: Inventories, consisting primarily of medical supplies and pharmaceuticals, are stated at the
lower of cost or net realizable value.

Investments: Investments in equity and debt securities, including alternative investments, are recorded at
fair value (Notes 4 and 6). Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date.

Realized gains and losses are calculated based on the average cost method. Investment income or loss
(including realized and unrealized gains and losses on investments, interest, and dividends) is included in
the consolidated statements of activities.

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

Alternative investments (principally limited partnership interests in absolute return, hedge, private equity,
real estate and natural resources funds) represent the Clinic’s ownership interest in the respective
partnership, which is valued at fair value based on net asset value (NAV) obtained from fund manager
statements and historically audited financial statements, as a practical expedient. The investments in
alternative investments may individually expose the Clinic to securities lending, short sales, and trading in
futures and forward contract options and other derivative products. The Clinic’s risk is limited to the
investment’s carrying value.

It is the Clinic’s intent to maintain a long-term investment portfolio to support research, education and
other activities. Accordingly, the total investment return is reported in the consolidated statements of
activities in two categories. The investment return allocated to current activities is determined by a
formula, which involves allocating five percent of a three-year moving average of investments related to
endowments, and the matching of financing costs for the assets required for operations. Management
believes this return is approximately equal to the real return that the Clinic expects to earn on its
investments over the long term. The unallocated investment return, included in noncurrent and other
items in the consolidated statements of activities, represents the difference between the total investment
return and the amount allocated to current activities, net of investment costs.

Property, plant, and equipment: Property, plant, and equipment are carried at cost if purchased or at
fair value on the date received through affiliation or donation, less accumulated depreciation. Plant and
equipment are depreciated over their estimated useful lives, ranging from three to fifty years using the
straight-line method. Depreciation expense includes amortization of assets recorded under capital leases.

Costs associated with the development and installation of internal-use software are accounted for in
accordance with Intangibles—Goodwill and Other, Internal-Use Software (Subtopic 350-40) of the FASB
ASC. Accordingly, internal-use software costs are expensed or capitalized and amortized according to the
provisions of the accounting standard.

Leases: The Clinic determines if an arrangement is a lease at inception. Operating leases are included in
other long-term assets, other current liabilities, and other long-term liabilities in the consolidated
statements of financial position. Finance leases are included in property, plant, and equipment, other
current liabilities, and other long-term liabilities in the consolidated statements of financial position.

Right-of-use (ROU) assets represent the right to use an underlying asset for the lease term, and lease
liabilities represent the obligation to make lease payments arising from the lease. ROU assets and
liabilities are recognized at the commencement date, based on the present value of lease payments over
the lease term. As most of the leases do not provide an implicit rate, the Clinic uses an incremental
borrowing rate based on the information available at the commencement date in determining the present
value of lease payments. The implicit rate is used when readily determinable. The ROU asset also
includes any lease payments made and excludes lease incentives. The lease term may include options to
extend or terminate the lease when it is reasonably certain the Clinic will exercise the option.

The Clinic defines a short-term lease as any lease arrangement with a lease term of twelve months or
less that does not include an option to purchase the underlying asset. Short-term lease payments are
recognized as expense on a straight-line basis over the lease term and variable lease payments in the
period in which the obligation is incurred.

The Clinic has lease arrangements with lease and non-lease components, which are generally accounted
for separately, except the Clinic has elected the practical expedient to not separate non-lease
components for real estate leases. Additionally, for certain equipment leases, the Clinic applies a portfolio
approach to effectively account for the ROU assets and liabilities.

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

Deferred revenue: Deferred revenue consists of payments received in advance for grant, subscription,
and tuition revenue. Deferred revenues are subsequently recognized as revenue in accordance with the
Clinic’s revenue recognition policies.

Deferred compensation: The Clinic offers eligible employees a nonqualified, tax-deferred compensation
retirement plan. Employees defer compensation into the plan on a pretax basis. The compensation
deferred under this plan is credited with earnings and losses as determined by the rate of return on
investments selected by the plan participants. Each participant is fully vested in all deferred
compensation and those earnings credited to their individual accounts. The amounts deferred under this
plan is an unsecured obligation of the Clinic. The balances are reflected in investments and other long-
term liabilities in the consolidated statements of financial position. The related investment return is
reported in unallocated investment return, net, with a corresponding gain/loss representing benefit
expense/income reported in the other - noncurrent section of the consolidated statements of activities.

Asset retirement obligations: The Clinic accounts for the estimated cost of legal obligations associated
with long-lived asset retirements in accordance with Asset Retirement and Environmental Obligations
(Topic 410) of the FASB ASC. The asset retirement liability, recorded in other long-term liabilities, is
accreted to the present value of the estimated future costs of these obligations at the end of each period.

Net assets: Net assets, revenues, gains, and losses are classified based on the existence or absence of
donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and
reported as follows:

Net Assets Without Donor Restrictions - Net assets available for use in general operations and not subject
to donor restrictions. The governing board has designated, from net assets without donor restrictions, net
assets for an operating reserve and board-designated endowment.

Net Assets With Donor Restrictions - Net assets subject to donor-imposed restrictions. Some donor-
imposed restrictions are temporary in nature, such as those that will be met by the passage of time or
other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the
donor stipulates that resources be maintained in perpetuity. Gifts of long-lived assets and gifts of cash
restricted for the acquisition on long-lived assets are recognized as revenue when received. Donor-
imposed restrictions are released when a restriction expires, that is, when the stipulated time has
elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both.

Medical service revenue: Medical service revenue is reported at the amount that reflects the
consideration to which the Clinic expects to be entitled in exchange for providing patient care.

Grants and contracts: Reciprocal grants and contracts revenue is recognized when the expenses have
been incurred for the purpose specified by the grantor or in accordance with the terms of the agreement.
Contributed grants and contracts revenue is recorded as conditions are met or immediately if deemed an
unconditional contribution. Grant and contract amounts due to the Clinic are included in other receivables.

Charity and uncompensated care: The Clinic provides health care services to patients who meet
certain criteria under its Charity Care Policy without charge or at amounts less than established rates.
Since the Clinic does not pursue collection of these amounts, they are not reported as revenue. The
estimated cost of providing these services was $130 and $58 in 2024 and 2023, respectively, calculated
by multiplying the ratio of cost to gross charges for the Clinic by the gross uncompensated charges
associated with providing care to charity patients. In addition to the charges related to the direct patient
care provided under the Clinic’s Charity Care Policy, the Clinic has programs offered to benefit the
broader community and other governmental reimbursement programs. The Clinic also participates in

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

various state Medicaid programs for indigent patients. The estimated unreimbursed cost of providing
services related to Medicaid programs totaled $622 and $624 in 2024 and 2023, respectively.

Contributions: The Clinic classifies contributions that are available for current activities as revenue,
based on the lack of specific donor restriction or the presence of donor restrictions and the ability of the
Clinic to meet those restrictions within the year. Contributions of a perpetual nature or not available for
current activities are classified in noncurrent and other items in the consolidated statements of activities.
Development expenses of $67 ($51 allocated to current and $16 allocated to noncurrent) and $59 ($42
allocated to current and $17 allocated to noncurrent) were incurred in 2024 and 2023, respectively. The
current portion is recorded in expenses, and the noncurrent portion is netted against contributions not
available for current activities in the consolidated statements of activities. Unconditional promises to give
and contributions are reported at fair value at the time of the gift. An allowance for uncollectible pledges
receivable is estimated, based on a combination of historical experience and specific identification.

Conditional promises to give are recognized at fair value when the barriers to entitlement are overcome or
the possibility that a condition will not be met is remote.

The Clinic periodically receives works of art from various benefactors. These items are unique in nature
and are held on display for the benefit and enjoyment of the Clinic’s patients. It is the Clinic’s policy to
neither capitalize contributed works of art nor record the related contribution revenue.

Income from current activities: The Clinic’s policy is to include in income from current activities all
medical service and other revenue, grants and contracts, investment return allocated to current activities,
contributions available for current activities, net assets released from restrictions, and substantially all
expenses. Contributions not available for current activities, unallocated investment return, income tax
expense, benefit credit, and those items not expected to recur on a regular basis are included in
noncurrent and other items in the consolidated statements of activities.

Noncontrolling interest in subsidiaries: The Clinic attributed income of $5 and $6 for the years ended
December 31, 2024 and 2023 , respectively, to noncontrolling interests based on the ownership
percentage of the noncontrolling interests in certain of the Clinic’s consolidated subsidiaries. These
amounts are recognized in net assets without donor restrictions on the consolidated statements of
financial position. The balance in net assets without donor restrictions was $58 and $68 for the years
ended December 31, 2024 and 2023, respectively.

Subsequent events: The Clinic evaluated events and transactions occurring subsequent to
December 31, 2024 through March 3, 2025, the date of issuance of the consolidated financial statements.
During this period, there were no subsequent events requiring recognition in the consolidated financial
statements. Additionally, there were no unrecognized events requiring disclosure.

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 2. Liquidity and Availability

Financial assets available for general expenditure within one year of the consolidated statement of
financial position date are composed of the following at December 31:

2024 2023

Cash and cash equivalents $ 48 $ 80

Accounts receivable 2,123 1,976
Promises to give 245 325
Grants receivable 160 173
Other receivables 302 289
Investments 12,903 12,750
Total financial assets available within one year $ 15,781 $ 15,593

As part of a liquidity management plan, the Clinic has a policy to structure its financial assets to be
available as its general expenditures, liabilities, and other obligations come due. Cash in excess of daily
requirements is invested in short-term investments. In the event of an unanticipated liquidity need, the
Clinic has $300 of available lines of credit for working capital (see Note 9 - Financing).

The Clinic's endowment funds consist of donor-restricted endowments and funds designated by the board
as endowment. Income from endowments is restricted for specific purposes. As described in Note 13 -
Endowment, under the Clinic spending policy, $311 from the endowments was available as of January 1,
2025 and $303 from the endowments was available at January 1, 2024.

Note 3. Medical Service Revenue

Medical service revenue is reported at the amount that reflects the consideration to which the Clinic
expects to be entitled in exchange for providing patient care. These amounts, representing transaction
price, are due from patients, third-party payors (including health insurers and government programs), and
others and include variable consideration for retroactive revenue adjustments due to settlement of audits,
reviews, and investigations. Generally, the Clinic bills the patients and third-party payors several days
after the services are performed and/or the patient is discharged from the facility. Revenue is recognized
as performance obligations are satisfied.

Performance obligations are determined based on the nature of the services provided by the Clinic.
Revenue for performance obligations satisfied over time is recognized based on actual charges incurred
in relation to total expected (or actual) charges. The Clinic believes that this method provides a faithful
depiction of the transfer of services over the term of the performance obligation based on the inputs
needed to satisfy the obligation. Generally, performance obligations satisfied over time relate to patients
in the Clinic's hospital receiving inpatient acute care services. The Clinic measures the performance
obligation from admission into the hospital to the point when it is no longer required to provide services to
that patient, which is generally at the time of discharge. Revenue for performance obligations satisfied at
a point in time is recognized when goods or services are provided and the Clinic does not believe it is
required to provide additional goods or services to the patient.

Because all of its performance obligations relate to contracts with a duration of less than one year, the
Clinic has elected to apply the optional exemption provided in Revenue from Contracts with Customers
(Topic 606-10-50-14(a)) and, therefore, is not required to disclose the aggregate amount of the
transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the
end of the reporting period. The unsatisfied or partially unsatisfied performance obligations referred to
above are primarily related to inpatient acute care services at the end of the reporting period. The
performance obligations for these contracts are generally completed when the patients are discharged,
which generally occurs within days or weeks of the end of the reporting period.

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 3. Medical Service Revenue (Continued)

The Clinic determines the transaction price based on standard charges for goods and services provided to
patients, reduced by contractual adjustments provided to third-party payors, discounts provided to
uninsured patients in accordance with the Clinic’s policy, and/or implicit price concessions based on
historical collection experience.

Agreements with third-party payors typically provide for payments at amounts less than established
charges. A summary of the payment arrangements with major third-party payors follows:

• Medicare: Certain inpatient acute care services are paid at prospectively determined rates per
discharge based on clinical, diagnostic, and other factors. Certain services are paid based on
cost-reimbursement methodologies subject to certain limits. Physician services are paid based
upon established fee schedules. Outpatient services are paid using prospectively determined
rates.
• Medicaid: Reimbursements for Medicaid services are generally paid at prospectively determined
rates per discharge, per occasion of service, or per covered member.
• Other: Payment agreements with certain commercial insurance carriers, health maintenance
organizations, and preferred provider organizations provide for payment using prospectively
determined rates per discharge, discounts from established charges, and prospectively
determined daily rates.

Laws and regulations concerning government programs, including Medicare and Medicaid, are complex
and subject to varying interpretation. As a result of investigations by governmental agencies, various
health care organizations have received requests for information and notices regarding alleged
noncompliance with those laws and regulations which, in some instances, have resulted in organizations
entering into significant settlement agreements. Compliance with such laws and regulations may also be
subject to future government review and interpretation, as well as significant regulatory action, including
fines, penalties, and potential exclusion from the related programs. There can be no assurance that
regulatory authorities will not challenge the Clinic’s compliance with these laws and regulations, and it is
not possible to determine the impact (if any) such claims or penalties would have upon the Clinic. In
addition, the contracts that the Clinic has with commercial payors also provide for retroactive audit and
review of claims.

Generally, patients who are covered by third-party payors are responsible for related deductibles and
coinsurance, which vary in amount. The Clinic also provides services to uninsured patients, and offers
those uninsured patients a discount, either by policy or law, from standard charges. The Clinic estimates
the transaction price for patients with deductibles and coinsurance and from those who are uninsured,
based on historical experience and current market conditions. The initial estimate of the transaction price
is determined by reducing the standard charge by any contractual adjustments, discounts, and implicit
price concessions. Subsequent changes to the estimate of the transaction price are generally recorded as
adjustments to medical service revenue in the period of the change. For the years ended December 31,
2024 and 2023, revenue recognized due to changes in its estimates of transaction price concessions for
performance obligations satisfied in prior years was $10 and $12, respectively. Subsequent changes that
are determined to be the result of an adverse change in the patient’s ability to pay are recorded as bad
debt expense. Bad debt expense for the years ended December 31, 2024 and 2023, was not significant.

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Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 3. Medical Service Revenue (Continued)

Settlements with third-party payors for retroactive adjustments due to audits, reviews, or investigations
are considered variable consideration and are included in the determination of the estimated transaction
price for providing patient care. These settlements are estimated based on the terms of the payment
agreement with the payor, correspondence from the payor, and the Clinic’s historical settlement activity,
including an assessment to ensure it is probable a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is
subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become
known (that is, new information becomes available) or as years are settled or are no longer subject to
such audits, reviews, and investigations. Adjustments arising from a change in the transaction price for
the years ended December 31, 2024 and 2023 were not significant. Receivables from third-party payors
for final settlements was $57 and $64 at December 31, 2024 and 2023, respectively.

The composition of medical service revenue based on the regions of the country in which the Clinic
operates, its lines of business, and timing of revenue recognition for the years ended December 31, 2024
and 2023, are as follows:

Year Ended December 31, 2024

Midwest Southeast Southwest Total
Hospital $ 5,970 $ 1,407 $ 1,809 $ 9,186
Clinic 4,077 1,057 1,104 6,238
Senior Care and Nursing Home 16 — — 16
Other 103 1 — 104
Total patient care service revenue 10,166 2,465 2,913 15,544

External lab 1,010 — — 1,010

Total medical service revenue $ 11,176 $ 2,465 $ 2,913 $ 16,554

Timing of revenue and recognition:

At time services are rendered $ 5,190 $ 1,058 $ 1,104 $ 7,352
Services transferred over time 5,986 1,407 1,809 9,202
Total $ 11,176 $ 2,465 $ 2,913 $ 16,554

Year Ended December 31, 2023

Midwest Southeast Southwest Total
Hospital $ 5,583 $ 1,271 $ 1,566 $ 8,420
Clinic 3,645 957 1,020 5,622
Senior Care and Nursing Home 15 — 15
Other 94 2 — 96
Total patient care service revenue 9,337 2,230 2,586 14,153
External lab 924 — — 924
Total medical service revenue $ 10,261 $ 2,230 $ 2,586 $ 15,077

Timing of revenue and recognition:

At time services are rendered $ 4,663 $ 959 $ 1,020 $ 6,642
Services transferred over time 5,598 1,271 1,566 8,435
Total $ 10,261 $ 2,230 $ 2,586 $ 15,077

13
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 3. Medical Service Revenue (Continued)

Hospital revenue includes a variety of services mainly covering inpatient procedures requiring overnight
stays or outpatient operations that require anesthesia or use of complex diagnostic and surgical
equipment, as well as emergency care for traumas and other critical conditions. Clinic revenue includes
services mainly focused on the care of outpatients covering primary and specialty health care needs. The
Clinic's practice is to record certain radiology, pathology, and other hospital related services in the
Midwest region as clinic revenue in the amount of $1,268 and $1,130 for the years ended December 31,
2024 and 2023, respectively. Examples of revenue at the time services are rendered include clinical
services, lab and transport, and services transferred over time include hospital and senior care revenue.

The composition of medical service revenue by payor for the years ended December 31 is as follows:

2024 2023
Medicare $ 4,439 $ 4,029
Medicaid 607 561
Contract 9,695 8,853
Other, including self-pay 1,813 1,634
Total $ 16,554 $ 15,077

The Clinic’s practice is to assign a patient to the primary payor and not reflect other uninsured balances
(for example, coinsurance and deductibles) as self-pay. Therefore, the payors listed above contain patient
responsibility components, such as coinsurance and deductibles.

The Clinic has elected the practical expedient allowed under FASB ASU 2014-09, Revenue from
Contracts with Customers (Topic 606-10-32-18) and does not adjust the promised amount of
consideration from patients and third-party payors for the effects of a significant financing component due
to the Clinic’s expectation that the period between the time the service is provided to a patient and the
time that the patient or a third-party payor pays for that service will be one year or less. However, the
Clinic does, in certain instances, enter into payment agreements with patients that allow payments in
excess of one year. For those cases, the financing component is not deemed to be significant to the
contract.

Note 4. Fair Value Measurements

The Clinic holds certain financial instruments that are required to be measured at fair value on a recurring
basis. The valuation techniques used to measure fair value under the Fair Value Measurement (Topic
820) of the FASB ASC are based upon observable and unobservable inputs. The standard establishes a
three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is
based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.
The three levels are defined as follows:

Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or
liabilities in active markets.

Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active
markets, and inputs that are observable for the asset or liability, either directly or indirectly, for
substantially the same term of the financial instrument.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.

14
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 4. Fair Value Measurements (Continued)

A financial instruments categorization within the valuation hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. The Clinic’s policy is to recognize transfers in and
transfers out as of the actual date of the event or change in circumstances that caused the transfer. There
were no significant transfers or activity within Levels for the years ended December 31, 2024 and 2023.

The following tables present the financial instruments carried at fair value as of December 31,2024 and
2023, on the consolidated statements of financial position categorized by the valuation hierarchy and
NAV:

December 31, 2024

Total Fair
Level 1 Level 2 Level 3 NAV Value
Assets:
Securities lending collateral $ 30 $ – $ – $ – $ 30

Investments:
Cash and cash equivalents 1,464 161 — — 1,625
Fixed-income securities: — 2,244 — — 2,244
U.S. government — 933 — — 933
U.S. government agencies — 1,016 — — 1,016
U.S. corporate — 26 — — 26
Foreign
Common and preferred stocks:
U.S. 1,284 — — — 1,284
Foreign 711 — — — 711
Funds:
Fixed income 452 – — — 452
Equities 1,346 751 — — 2,097
Less securities under lending agreement (76) — — — (76)
Investments at NAV — — — 10,570 10,570
Total investments $ 5,181 $ 5,131 $ — $ 10,570 $ 20,882

Investments under securities lending

agreement $ 76 $ — $ — $ — $ 76

Other long-term assets:

Trust receivables $ 70 $ 29 $ 247 $ — $ 346
Technology-based ventures $ — $ — $ 295 $ — $ 295
Total other long-term assets $ 70 $ 29 $ 542 $ — $ 641
Total assets at fair value $ 5,357 $ 5,160 $ 542 $ 10,570 $ 21,629

Liabilities:
Securities lending payable $ 30 $ — $ — $ — $ 30
Total liabilities at fair value $ 30 $ — $ — $ — $ 30

15
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 4. Fair Value Measurements (Continued)

December 31, 2023
Total Fair
Level 1 Level 2 Level 3 NAV Value
Assets:
Securities lending collateral $ 10 $ — $ — $ — $ 10

Investments:
Cash and cash equivalents 1,137 66 — — 1,203
Fixed-income securities: — 1,969 — — 1,969
U.S. government — 840 — — 840
U.S. government agencies — 918 — — 918
U.S. corporate — 51 — — 51
Foreign
Common and preferred stocks:
U.S. 1,391 — — — 1,391
Foreign 858 — 20 — 878
Funds:
Fixed income 398 – — — 398
Equities 1,107 716 — — 1,823
Less securities under lending agreement (86) — — — (86)
Investments at NAV — — — 9,363 9,363
Total investments $ 4,805 $ 4,560 $ 20 $ 9,363 $ 18,748

Investments under securities lending

agreement $ 86 $ — $ — $ — $ 86

Other long-term assets:

Trust receivables $ 69 $ 29 $ 120 $ — $ 218
Technology-based ventures $ — $ — $ 268 $ — $ 268
Total other long-term assets $ 69 $ 29 $ 388 $ — $ 486
Total assets at fair value $ 4,970 $ 4,589 $ 408 $ 9,363 $ 19,330

Liabilities:
Securities lending payable $ 10 $ — $ — $ — $ 10
Total liabilities at fair value $ 10 $ — $ — $ — $ 10

The following is a description of the Clinic’s valuation methodologies for assets and liabilities measured at
fair value. Fair value for Level 1 is based upon quoted market prices. Fair value for Level 2 is based on
quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active, and model-based valuation techniques for which all significant assumptions
are observable in the market or can be corroborated by observable market data for substantially the full
term of the assets and liabilities. Inputs are obtained from various sources, including market participants,
dealers, and brokers. Level 3 primarily consists of trusts recorded at fair value based on the underlying
value of the assets in the trust or discounted cash flow of the expected payment streams.

The trusts reported as Level 3 are primarily perpetual trusts managed by third parties invested in stocks,
mutual funds, and fixed-income securities that are traded in active markets with observable inputs and,
since the Clinic will never receive the trust assets, these perpetual trusts are reported as Level 3. In
addition, technology-based ventures, composed primarily of shares in start-up companies, are recorded
at fair value based on inputs relying on factors such as the financial performance of the company, sales
performance, financial projections, sales projections, management representation, industry
developments, market analysis, and any other pertinent factors that would affect the fair value or based
on the quoted price of an otherwise identical unrestricted security of the same issuer, adjusted for the
effect of the restriction.

16
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 4. Fair Value Measurements (Continued)

The methods described above and those recorded at NAV may produce a fair value calculation that may
not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Clinic
believes its valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments could
result in a different estimate of fair value at the reporting date.

The following information pertains to those alternative investments recorded at NAV in accordance with
Fair Value Measurement (Topic 820) of the FASB ASC.

At December 31, 2024, alternative investments recorded at NAV consisted of the following:

Redemption Redemption
Unfunded Frequency (If Notice
Fair Value Commitment Currently Eligible) Period

Absolute return/hedge funds (a) $ 4,796 $ 414 Monthly to annually 30–90 days
Private partnerships (b) 5,774 1,897
Total alternative investments $ 10,570 $ 2,311

At December 31, 2023, alternative investments recorded at NAV consisted of the following:

Redemption Frequency Redemption

Unfunded (If Notice
Fair Value Commitment Currently Eligible) Period

Absolute return/hedge funds (a) $ 4,254 $ 388 Monthly to annually 30–90 days
Private partnerships (b) 5,109 2,043
Total alternative investments $ 9,363 $ 2,431

(a) This category includes investments in absolute return/hedge funds, which are actively managed
commingled investment vehicles that derive the majority of their returns from factors other than the
directional flow of the markets in which they invest. Representative strategies include high-yield
credit, distressed debt, merger arbitrage, relative value, and long-short equity strategies. The fair
values of the investments in this category have been estimated using the NAV per share of the
investments. Investments in this category generally carry “lockup” restrictions that do not allow
investors to seek redemption in the first year after acquisition. Following the initial lockup period,
liquidity is generally available monthly, quarterly, or annually following a redemption request. Over 90
percent of the investments in this category have at least annual liquidity.
(b) This category includes limited partnership interests in closed-end funds that focus on venture capital,
private equity, real estate, and resource-related strategies. The fair values of the investments in this
category have been estimated using the NAV of the Clinic’s ownership interest in partners’ capital.
Distributions from each fund will be received as the underlying investments of the funds are
liquidated. It is estimated that the underlying assets of most funds will generally be liquidated over a
seven- to ten-year period.

From time to time, the Clinic invests directly in certain derivative contracts that do not qualify for hedge
accounting and are recorded at fair value in investments. Changes in fair value are reported as a
component of net unrealized gains or losses in the investment returns. These contracts are used in the
Clinic’s investment management program to minimize certain investment risks. During the years ended
December 31, 2024 and 2023, the realized and unrealized loss from derivative contracts was not
significant.

17
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 4. Fair Value Measurements (Continued)

The Clinic uses various external investment managers to diversify the investments. The largest allocation
to any investment strategy manager as of December 31, 2024 and 2023 was $1,020 (6.6 percent) and
$881 (6.3 percent), respectively.

The Clinic is required to maintain funds held by trustees under bond indentures and other arrangements.
The trustee-held investments, which primarily consist of mutual funds, were $1,320 and $1,142,
respectively, at December 31, 2024 and 2023, which includes segregated investments for deferred
compensation plans of $1,317 and $1,129 at December 31, 2024 and 2023, respectively.

At December 31, 2024 and 2023, cash and mutual funds included segregated investments owned by
Mayo Foundation for Medical Education and Research, a wholly owned subsidiary of the Clinic, for gift
annuity reserves of $126 and $116, respectively.

The Clinic had internally designated investment balances of $3,324 and $3,181 at December 31, 2024
and 2023, respectively, for research, education, and capital replacement and expansion.

Note 5. Investments in Unconsolidated Entities

The Clinic holds certain investments in unconsolidated entities accounted for in accordance with FASB
Subtopic 323, Investments - Equity Method and Joint Ventures. The investments are presented as other
long-term assets in the consolidated statements of financial position. The Clinic's interest in the
investment income is reflected in the accompanying consolidated statements of operations.

The following table presents investments in unconsolidated entities:

Ownership Carrying Value Carrying Value

Percentage as of as of as of
December 31, December 31, December 31,
2024 2024 2023

Sheikh Shakhbout Medical City —% $ – $ 157

Other investees Various $ 3 $ 7

The Clinic entered into a joint venture agreement with Abu Dhabi Health Services Company PJSC
(SEHA) to operate Sheikh Shakhbout Medical City (SSMC), a 741-bed hospital in the United Arab
Emirates in November 2019. In addition to the joint venture agreement, the Clinic entered into a hospital
expertise agreement, brand license agreement, and research contribution agreement with SSMC. The
joint venture had an initial commitment period of twenty years which would have been extended by ten
years if neither party terminated at the conclusion of the initial commitment period. The Clinic had a $150
conditional pledge from Sheikh Shakhbout Medical City at December 31, 2023. SEHA acquired the
Clinic's interest in SSMC with the transaction successfully closing in the first quarter of 2024. As part of
this transaction, the parties also terminated the joint venture and related agreements.

18
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 5. Investments in Unconsolidated Entities (Continued)

The summarized financial position and results of operations for SSMC accounted for under the equity
method as of and for the years ended consisted of the following:

2024 2023
As of December 31
Total assets $ – $ 842
Total liabilities $ – $ 236
Partners equity/net assets $ – $ 842

Year Ended December 31

Total revenue $ – $ 586
Gain (loss) from current activities $ – $ 4

Note 6. Securities Lending

The Clinic has an arrangement with its investment custodian to lend Clinic securities to approved brokers
in exchange for a fee. Among other provisions that limit the Clinic’s risk, the securities lending agreement
specifies that the custodian is responsible for lending securities and obtaining adequate collateral from
the borrower. Collateral is limited to cash, government securities, and irrevocable letters of credit.

Investments are loaned to various brokers and are returnable on demand. In exchange, the Clinic
receives collateral. The cash collateral is shown as both an asset and a liability on the consolidated
statements of financial position.

At December 31, 2024 and 2023, the aggregate market value of securities on loan under securities
lending agreements totaled $76 and $86, respectively, and the total value of the collateral supporting the
securities was $79 and $90, respectively, which represents 104% of the value of the securities on loan at
December 31, 2024 and 2023. The cash portion of the collateral supporting the securities as of December
31, 2024 and 2023 was $30 and $10, respectively. The cash portion is presented in other current assets
and other current liabilities in the consolidated statements of financial position. Noncash collateral
provided to the Clinic is not recorded in the consolidated statements of financial position, as the collateral
may not be sold or repledged. The Clinic’s claim on such collateral is limited to the market value of loaned
securities. In the event of nonperformance by the other parties to the securities lending agreements, the
Clinic could be exposed to a loss.

Note 7. Property, Plant, and Equipment, Net

Property, plant, and equipment, net, at December 31 consisted of the following:

2024 2023

Land $ 620 $ 589

Buildings and improvements 8,629 7,663
Furniture and equipment 4,926 4,693
14,175 12,945
Accumulated depreciation and amortization (8,082) (7,618)
6,093 5,327
Construction in progress 1,006 1,104
Total property, plant, and equipment $ 7,099 $ 6,431

19
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 7. Property, Plant, and Equipment, Net (Continued)

The above costs and accumulated depreciation include costs for capitalized software, including costs
capitalized in accordance with Intangibles—Goodwill and Other, Internal-Use Software (Topic 350) of the
FASB ASC. The total cost for capitalized software was $763 and $771 at December 31, 2024 and 2023,
respectively. The total accumulated amortization was $608 and $582 at December 31, 2024 and 2023,
respectively. Amortization expense for capitalized software was $70 and $67 in 2024 and 2023,
respectively.

Note 8. Income Taxes

Most of the income received by the Clinic and its subsidiaries is exempt from taxation under Section
501(a) of the Internal Revenue Code. Some of its subsidiaries are taxable entities, and some of the
income received by otherwise exempt entities is subject to taxation as unrelated business income. The
Clinic and its subsidiaries file income tax returns in the U.S., including federal and various state returns,
as well as certain foreign jurisdictions. The statutes of limitations for tax years 2021 through 2023 remain
open in major U.S. taxing jurisdictions in which the Clinic and subsidiaries are subject to taxation.

The Internal Revenue Service (IRS) performed an examination of the tax and information returns of the
Clinic and two subsidiaries and ultimately assessed $12 in taxes for years 2003-2012. The results of this
audit were litigated in the U.S. District Court. On August 6, 2019, the Court issued a summary judgment in
favor of the Clinic. The IRS appealed this decision and on May 13, 2021, the Eighth Circuit Court of
Appeals reversed the summary judgment and remanded the case to the U.S. District Court for trial. The
case was tried in 2022 and the U.S. District Court issued a judgment in favor of the Clinic on December 9,
2022. The IRS disagreed with this ruling and filed an appeal with the Eighth Circuit Court of Appeals on
September 1, 2023. Oral Arguments were made before the Eighth Circuit Court of Appeals on October 23,
2024, but the Court has not yet issued its ruling. No adjustment has been made to unrecognized tax
benefits as the issue has not been definitively resolved at this time.

The Clinic has increased the reserve for uncertain tax positions by $5, including interest and penalties,
during the year ended December 31, 2024. As of December 31, 2024 and 2023, the reserve totaled $14
and $9, respectively. It is not anticipated that a significant change in the reserve will occur over the next
12 months.

The Clinic’s practice is to recognize interest and/or penalties related to income tax matters in income tax
expense. The components of tax expense are as follows:

Year ended December 31

2024 2023

Current—federal $ 41 $ 28
Current—state 6 7
47 35
Deferred—U.S. domestic (6) 6
Total $ 41 $ 41

Cash payments for income taxes were $26 and $62 for the years ended December 31, 2024 and 2023,
respectively.

20
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 8. Income Taxes (Continued)

The Clinic records deferred income taxes due to temporary differences between financial reporting and tax
reporting for certain assets and liabilities of its taxable activities. The following is a summary of the
components of deferred taxes as of December 31:

2024 2023

Deferred compensation $ 10 $ 9
Postretirement benefits — 1
Net operating loss 21 2
Other 5 4
Total deferred tax asset 36 16
Deferred tax liability (1) (2)
Valuation allowance (27) (10)
Net deferred tax asset $ 8 $ 4

The Clinic had federal net operating losses of $22 and $11 at December 31, 2024 and 2023, respectively.

The Tax Cuts and Jobs Act (TCJA), enacted on December 22, 2017 repealed Net Operating Loss (NOL)
carrybacks while permitting indefinite carryforwards. The Coronavirus Aid, Relief and Economic Security
Act enacted on March 27, 2020 temporarily suspended TCJA repeal of NOL carrybacks allowing for
NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021 to be carried
back to the five taxable years preceding the taxable year of such loss. During 2024, the Clinic was able to
carryback the remaining $6 of the NOLs arising in tax years beginning after December 31, 2017. Of the
NOLs arising after January 1, 2018, $22 will be carried forward.

Note 9. Financing

Long-term debt at December 31 consisted of the following:

2024 2023
City of Rochester, Minnesota Revenue Bonds issued in various
series, subject to variable interest rates to a maximum rate of
15.00% (the average rate was 3.42% in 2024 and 3.47% in
2023), principal due in varying amounts from 2028 through 2052 Variable $ 545 $ 545
City of Rochester, Minnesota Revenue Bonds originally issued at
variable interest rate, converted in 2017 to fixed interest rate of
2.20% based on a provision to increase the rate if the federal tax
rate is decreased, the rate has been adjusted to 2.67% effective
January 1, 2018 through 2027, principal due in varying amounts
from 2025 through 2032 Fixed 110 127
City of Rochester, Minnesota Revenue Bonds originally issued
with fixed interest rate of 4.74%, converted in 2020 to fixed
interest rate of 1.54% until 2030, principal due in varying
amounts from 2033 through 2038 Fixed 130 130
City of Rochester, Minnesota Revenue Bonds issued in various
series with fixed rate of interest of 4.00%, principal due in
varying amounts from 2044 through 2048 Fixed 200 200

21
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 9. Financing (Continued)

2024 2023
City of Rochester, Minnesota Health Care Facilities Revenue
Refunding Bonds, series 2016B, issued with a coupon 5.00%,
an effective rate of 2.97% in 2024 and 2023 after amortization of
premium, principal due in varying amounts from 2029 through
2036 (unamortized premium of $37 in 2024 and $42 in 2023) Fixed 220 220
City of Rochester, Minnesota Health Care Facilities Revenue
Bonds, series 2022, issued in various series with fixed interest
rates ranging from 3.25% to 5.00%, an effective rate of 3.74% in
2024 and 2023 after amortization of premium principal due in
varying amounts from 2039 through 2057 (unamortized net
premium of $15 in 2024 and $16 in 2023) Fixed 289 289
Industrial Development Authority of the City of Phoenix, Arizona
issued in various series, subject to variable interest rates to a
maximum rate of 10.00% (the average rate was 2.97% in 2024
and 3.51% in 2023), principal due in varying amounts from 2048
through 2052 Variable 180 180
City of Jacksonville, Florida Health Care Facilities Revenue
Refunding Bonds, series 2016, issued in various series, subject
to variable interest rates to a maximum rate of 10.00% (the
average rate was 3.51% in 2024 and 3.55% in 2023), principal
due in varying amounts from 2033 through 2047 Variable 125 125
Mayo Clinic Taxable Bonds issued with fixed interest rates ranging
from 3.20% to 4.13%, principal due in varying amounts from
2039 through 2061 Fixed 1,450 1,450
Fixed-rate notes and bonds, payable to financial companies,
interest rates at 1.80% to 4.71%, principal due in varying
amounts from 2025 through 2062 Fixed 1,115 1,115
The Industrial Development Authority of the City of Phoenix,
Arizona Health Care Facilities Revenue Bonds, series 2022,
issued in various series with fixed interest rates ranging from
3.75% to 4.00%, an effective rate of 3.80% in 2024 and 2023
after amortization of premium, principal due in varying amounts
from 2053 to 2057 (unamortized net premium of $3 in 2024 and
2023) Fixed 298 298
Other notes payable 10 11
Unamortized discounts and premiums, net 55 61
Debt issuance cost (13) (15)
4,714 4,736
Long-term variable-rate debt classified as current (620) (620)
Current maturities included in other current liabilities (105) (18)
Long-term debt, net of current portion $ 3,989 $ 4,098

22
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 9. Financing (Continued)

The Clinic’s outstanding revenue bond issues are limited obligations of various issuing authorities payable
solely by the Clinic pursuant to loan agreements between the borrowing entities and the issuing
authorities. Under various financing agreements, the Clinic must meet certain operating and financial
performance covenants.

At December 31, 2024, the $850 of variable-rate bonds consisted of variable-rate demand revenue
bonds. In conjunction with the issuance of the variable-rate demand revenue bonds, the Clinic has
entered into various bank standby purchase and credit agreements in the amount of $230 of which $140
will expire in January 2026 and $90 will expire in January 2030. Under the terms of these agreements, the
bank will make liquidity loans to the Clinic in the amount necessary to purchase a portion of the variable-
rate demand revenue bonds if not remarketed. The liquidity loans would be payable over a three- to five-
year period, with the first payment due after December 31, 2025. The Clinic has provided self-liquidity for
the remaining $620 of variable-rate demand revenue bonds, which have been classified as current in the
accompanying consolidated statements of financial position.

The $220 fixed-rate revenue bonds Series 2016B are not callable. The remaining fixed-rate interest
revenue bonds are callable from 2025 to 2058 at the option of the Clinic, at a redemption price of 100
percent of the principal amount or at a price based on U.S. Treasury rates at the time of redemption.

The following are scheduled maturities of long-term debt for each of the next five years, assuming the
variable-rate demand revenue bonds are remarketed and the standby purchase agreements are
renewed. As described above, if such bonds are not remarketed, $620 may be due in 2025 and $230 may
be due in years from 2026 to 2030.

Years ending December 31:

2025 $ 105
2026 5
2027 105
2028 45
2029 67

Interest payments on long-term debt, net of amounts capitalized for 2024 and 2023, totaled $151 and

$154, respectively. The amount of interest capitalized, net of related interest income, was $17 and $12
during 2024 and 2023. Interest expense totaled $155 and $157 for 2024 and 2023, respectively.

At December 31, 2024 and 2023, the Clinic had unsecured lines of credit available with banks that totaled
$530, with varying renewable terms and interest up to 2.50 percent over various published rates. There
were no amounts drawn during the years ended December 31, 2024 and 2023.

Note 10. Leases

At December 31, 2024 and 2023, the Clinic had operating and finance leases for facilities and certain
equipment with lease terms ranging from 1 to 20 years, with some options to extend up to five years or
terminate within one year.

23
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 10. Leases (Continued)

Total lease expense for the years ended December 31 consisted of the following:

2024 2023

Operating lease expense $ 31 $ 30

Finance lease expense:

Amortization of right-of-use assets $ 10 $ 6
Interest on lease liabilities 1 1
Total finance lease expense $ 11 $ 7

Short-term lease expense $ 29 $ 48

Consolidated supplemental cash flow information related to leases as of December 31 consisted of the
following:

2024 2023

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases $ 62 $ 57
Operating cash flows for finance leases 1 1
Financing cash flows for finance leases 9 7

Right-of-use assets obtained in exchange for lease obligations:

Operating leases $ 34 $ 25
Finance leases 12 24

Consolidated supplemental statement of financial position information related to leases as of the years
ended December 31 consisted of the following:

2024 2023
Operating leases:
Right-of-use assets $ 136 $ 122

Other current liabilities $ 26 $ 22

Other long-term liabilities 137 127
Total operating lease liabilities $ 163 $ 149

24
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 10. Leases (Continued)

2024 2023
Finance leases:
Property, plant, and equipment, gross $ 60 $ 76
Accumulated depreciation 23 38
Property, plant, and equipment, net $ 37 $ 38

Other current liabilities $ 8 $ 9

Other long-term liabilities 29 27
Total finance lease liabilities $ 37 $ 36

Weighted average remaining lease years:

Operating leases 8.25 8.94
Finance leases 4.94 5.39

Weighted average discount rate:

Other long-term liabilities 3.50% 3.44%
Total finance lease liabilities 3.53% 3.38%

Maturities of lease liabilities for the next five years and thereafter consist of the following:

Operating Finance

2025 $ 30 $ 10
2026 28 8
2027 25 8
2028 23 6
2029 16 5
Thereafter 70 3
Minimum lease payments 192 40

Less amount representing interest 29 3

Net minimum lease payments $ 163 $ 37

25
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 11. Board-Designated Funds

Board-designated funds are subject to expenditure for the following purposes for the years ended
December 31:

2024 2023

Research $ 1,659 $ 1,581

Education 344 327
Buildings and equipment 3 3
Charity care 14 13
Clinical 168 164
Other 1,136 1,093
Total designation for specified purpose $ 3,324 $ 3,181

At December 31, board designated funds were classified as follows:

2024 2023

Quasi-endowments $ 3,113 $ 2,967

Professional liability reserve 178 185
Other 33 29
Total $ 3,324 $ 3,181

Note 12. Net Assets with Donor Restrictions

The Clinic receives contributions in support of research, education, and clinical activities. Net assets with
donor restrictions were available for the following purposes at December 31:

2024 2023
Subject to expenditure for specified purposes:
Research $ 749 $ 686
Education 64 59
Buildings and equipment 199 180
Charity care 34 32
Clinical 86 89
Other 44 38
Total expenditure for specified purposes 1,176 1,084

Subject to passage of time:

Pledges and trusts 730 682

26
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 12. Net Assets with Donor Restrictions (Continued)

2024 2023
Endowments:
Perpetual in nature:
Research $ 1,332 $ 1,263
Education 374 355
Charity care 15 14
Clinical 223 224
Other 63 50
Pledges and trusts 272 269
Total perpetual in nature 2,279 2,175

Subject to endowment spending policy:

Research 931 824
Education 408 370
Charity care 56 52
Clinical 185 166
Other 48 43
Total subject to endowment spending policy 1,628 1,455
Total endowments 3,907 3,630

Total net assets with donor restrictions $ 5,813 $ 5,396

Net assets were released from donor restrictions as expenditures were made, which satisfied the following
restricted purposes for the years ended December 31:

2024 2023

Research $ 292 $ 200

Education 38 30
Buildings and equipment 74 181
Other 40 31
Total net assets released from donor restrictions $ 444 $ 442

Note 13. Endowment

The Clinic’s endowment consists of approximately 2,500 individual funds established for a variety of
purposes. The endowment includes both donor-restricted endowment funds and funds designated by the
Board of Trustees to function as endowments (quasi-endowments). Net assets associated with
endowment funds, including quasi endowments, are classified and reported based on the existence or
absence of donor-imposed restrictions. The Board of Trustees retains the right to re-designate quasi
endowments for other purposes.

The Board of Trustees of the Clinic has interpreted the Minnesota State Prudent Management of
Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the
gift date of the donor-restricted endowment funds, absent explicit donor stipulations to the contrary. As a
result of this interpretation, the Clinic retains in perpetuity: (a) the original value of gifts donated to the

27
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 13. Endowment (Continued)

permanent endowment, (b) the original value of subsequent gifts to the perpetual endowment, and (c)
accumulations to the perpetual endowment made in accordance with the direction of the applicable donor
gift instrument at the time the accumulation is added to the fund.

In accordance with SPMIFA, the Clinic considers the following factors in making a determination to
appropriate or accumulate donor-restricted funds:

1. The duration and preservation of the fund

2. The purposes of the Clinic and the donor-restricted endowment fund
3. General economic conditions
4. The possible effects of inflation and deflation
5. The expected total return from income and the appreciation of investments
6. Other resources of the Clinic
7. The investment policies of the Clinic

The Clinic has adopted investment and spending policies for endowment assets that attempt to provide a
predictable stream of funding to programs supported by its endowment, while seeking to maintain
purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted
funds that the Clinic must hold in perpetuity or for a donor-specified period(s), as well as quasi-
endowments. Under this policy, as approved by the Board of Trustees, the endowment assets are
invested in a manner that is intended to produce a real return, net of inflation and investment
management costs, of at least five percent over the long term. Actual returns in any given year may vary
from this amount.

To satisfy its long-term rate-of-return objectives, the Clinic relies on a total return strategy in which
investment returns are achieved through both capital appreciation (realized and unrealized) and current
yield (interest and dividends). The Clinic targets a diversified asset allocation that places a greater
emphasis on equity-based and alternative investments to achieve its long-term objective within prudent
risk constraints.

The Clinic has a policy of appropriating for distribution each year five percent of its endowment fund’s
moving average fair value over the prior 36 months as of September 30 of the preceding year in which the
distribution is planned. In establishing this policy, the Clinic considered the long-term expected return on
its endowment. Accordingly, over the long term, the Clinic expects the current spending policy to allow its
endowment to grow at an average of the long-term rate of inflation. This is consistent with the Clinic’s
objective to maintain the purchasing power of the endowment assets held in perpetuity or for a specific
term, as well as to provide additional real growth through new gifts and investment return.

At December 31, 2024, the endowment net asset composition by type of fund consisted of the following:

Without Donor With Donor

Restrictions Restrictions Total

Donor-restricted funds $ — $ 3,907 $ 3,907

Quasi-endowments 3,113 — 3,113
Total funds $ 3,113 $ 3,907 $ 7,020

28
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 13. Endowment (Continued)

Changes in endowment net assets for the year ended December 31, 2024, consisted of the following:

Without Donor With Donor

Restrictions Restrictions Total

Endowment net assets, beginning of year $ 2,967 $ 3,630 $ 6,597

Investment return:
Investment income 40 46 86
Net appreciation (realized and unrealized) 249 286 535
Total investment return 289 332 621

Contributions — 103 103

Appropriation of endowment assets for expenditure (170) (158) (328)
Other changes:
Transfers to create quasi-endowments 27 — 27
Endowment net assets, end of year $ 3,113 $ 3,907 $ $ 7,020

At December 31, 2023, the endowment net asset composition by type of fund consisted of the following:

Without Donor With Donor

Restrictions Restrictions Total

Donor-restricted funds $ — $ 3,630 $ 3,630

Quasi-endowments 2,967 — 2,967
Total funds $ 2,967 $ 3,630 $ 6,597

Changes in endowment net assets for the year ended December 31, 2023, consisted of the following:

Without Donor With Donor

Restrictions Restrictions Total

Endowment net assets, beginning of year $ 2,830 $ 3,401 $ 6,231

Investment return:
Investment income 39 44 83
Net appreciation (realized and unrealized) 204 225 429
Total investment return 243 269 512

Contributions — 102 102

Appropriation of endowment assets for expenditure (167) (142) (309)
Other changes:
Transfers to create quasi-endowments 61 — 61
Endowment net assets, end of year $ 2,967 $ 3,630 $ 6,597

29
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 14. Promises to Give

At December 31, outstanding pledges from various corporations, foundations, and individuals, included in
other receivables and other long-term assets, were as follows:

2024 2023
Pledges due:
In less than one year $ 245 $ 325
In one to five years 330 311
In more than five years 39 65
614 701
Allowance for uncollectible pledges and discounts (28) (30)
Total $ 586 $ 671

Estimated cash flows from pledge receivables due after one year are discounted using a risk-adjusted
rate, ranging from 1 percent to 6 percent, that is commensurate with the pledges due dates and
established in the year the pledge is received.

The Clinic has received interests in various trusts, primarily split-interest, which are included in other long-
term assets. The trusts are recorded at fair value, based on the underlying value of the assets in the trust
or discounted cash flow using a risk-adjusted discount rate of 5.43 percent and 5.77 percent at December
31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, there were no
contributions recorded related to the split-interest trusts. The balance of the expected payment streams
was $346 and $218 at December 31, 2024 and 2023, respectively.

Note 15. Functional Expenses

The consolidated financial statements present certain expenses that are attributed to more than one
program or supporting function. Therefore, expenses require allocation on a reasonable basis that is
consistently applied. Benefits and payroll taxes are allocated based on factors of either salary expense or
hours worked. Overhead costs that include professional services, office expenses, information
technology, interest, insurance, and other similar expenses are allocated based on a variety of factors,
including revenues, hours worked, and salary expense. Costs related to space, including occupancy,
depreciation and amortization, and property taxes, are allocated on a square footage basis.

The expenses reported in the consolidated statements of activities for the years ended December 31,
2024 and 2023 supported the following programs and functions:
2024
Lab and Graduate and
Patient technology other General and Development Other Total
care ventures Research education administrative expenses activities expenses

Salaries and benefits $ 8,685 $ 213 $ 807 $ 425 $ 257 $ 33 $ 62 $ 10,482

Supplies and services 4,723 1,314 347 102 105 16 124 6,731
Depreciation and amortization 561 8 74 14 23 1 4 685
Facilities 311 6 24 15 56 1 2 415
Finance and investment 186 8 19 2 4 — (30) 189
Total $ 14,466 $ 1,549 $ 1,271 $ 558 $ 445 $ 51 $ 162 $ 18,502

30
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 15. Functional Expenses (Continued)

2023
Lab and Graduate and
Patient technology other General and Development Other Total
care ventures Research education administrative expenses activities expenses

Salaries and benefits $ 7,982 $ 190 $ 728 $ 392 $ 290 $ 28 $ 57 $ $ 9,667

Supplies and services 4,231 1,132 299 94 46 12 136 5,950
Depreciation and amortization 552 8 69 13 16 1 4 663
Facilities 311 6 20 14 34 1 2 388
Finance and investment 168 10 20 2 2 — (10) 192
Total $ 13,244 $ 1,346 $ 1,136 $ 515 $ 388 $ 42 $ 189 $ $ 16,860

Note 16. Employee Benefit Programs

The Clinic serves as plan sponsor for several defined benefit pension funds and other postretirement
benefits.

Included in other changes in unrestricted net assets at December 31, 2024 and 2023, are the following
amounts, respectively, that have not yet been recognized in net periodic cost: unrecognized actuarial
losses of $317 and $620 and unrecognized prior service benefit of $109 and $102. Actuarial losses are
amortized as a component of net periodic pension cost, only if the losses exceed ten percent of the
greater of the projected benefit obligation or the fair value of plan assets. Unrecognized prior service
benefits are amortized on a straight-line basis over the estimated life of plan participants.

Changes in plan assets and benefit obligations recognized in unrestricted net assets during 2024 and
2023 included the following:

2024 2023

Current-year actuarial gain (loss) $ 936 $ (482)

Amortization of actuarial loss 1 (1)
Current-year prior service cost — (116)
Amortization of prior service credit (7) (49)
Pension and other postretirement benefit adjustments $ 930 $ (648)

Pension plans:

Obligations and funded status: The following is a summary of the changes in the benefit obligation and
plan assets, the resulting funded status of the qualified and nonqualified pension plans, and accumulated
benefit obligation as of and for the years ended December 31:

2024 2023
Change in projected benefit obligation:
Benefit obligation, beginning of year $ 8,889 $ 7,809
Service cost 426 383
Interest cost 468 436
Actuarial (gain) loss (796) 572
Benefits paid (412) (424)
Plan amendments — 113
Estimated benefit obligation at end of year $ 8,575 $ 8,889

31
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 16. Employee Benefit Programs (Continued)

2024 2023
Change in plan assets:
Fair value of plan assets, beginning of year $ 10,702 $ 9,965
Actual return on plan assets 996 878
Employer contributions 281 283
Benefits paid (412) (424)
Fair value of plan assets at end of year $ 11,567 $ 10,702

2024 2023

Funded status of the plans $ 2,992 $ 1,813

Accumulated benefit obligation $ (7,803) $ (8,094)

Amounts recognized in the consolidated statements of financial position consist of the following at
December 31:

2024 2023

Noncurrent assets $ 2,993 $ 1,814

Noncurrent liabilities (1) (1)
Net amount recognized $ 2,992 $ 1,813

Components of net periodic benefit cost are as follows for the years ended December 31:

2024 2023

Service cost $ 426 $ 383

Interest cost 468 436
Expected return on plan assets (831) (778)
Amortization of unrecognized:
Prior service benefit (8) (50)
Net periodic benefit cost $ 55 $ (9)

Plan assets: The largest of the pension funds is the Mayo Clinic Master Retirement Trust Plan, which
holds $11,434 of the $11,567 in combined plan assets at December 31, 2024, and $10,574 of the $10,702
in combined plan assets at December 31, 2023. The investment policies described below apply to the
Mayo Clinic Master Retirement Trust Plan (the Plan).

The Plan employs a global, multi-asset approach in managing its retirement plan assets. This approach is
designed to maximize risk-adjusted returns over a long-term investment horizon, consistent with the
nature of the pension liabilities being funded. The plan asset portfolio’s target allocation for total return
investment strategies, which include public equities, private equities, absolute return, and real assets, is
82.5 percent. The portfolio’s target fixed-income exposure is 17.5 percent. The fixed-income exposure
may include the use of long-term interest rate swap contracts structured to increase the portfolio’s interest
rate sensitivity and thereby provide a hedge of the plan liabilities resulting from falling long-term interest
rates. Investments in private equities, real assets, and absolute return strategies are held to improve
diversification and thereby enhance long-term, risk-adjusted returns. However, recognizing that these
investments are not as liquid as publicly traded stocks and bonds, portfolio investment policies limit

32
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 16. Employee Benefit Programs (Continued)

overall exposure to these assets. The portfolio’s allocation to private equities and real assets is limited to
a maximum of 35 percent (with a target allocation of 25 percent), and exposure to absolute return
strategies is limited to a maximum of 30 percent (with a target of 25 percent). The Clinic reviews
performance, asset allocation, and risk management reports for plan asset portfolios on a monthly basis.

The fair values of the Plan’s assets at December 31, 2024, by asset category, are as follows:

Quoted Prices in
Active Markets Significant Significant
for Identical Observable Unobservable
Assets Inputs Inputs
Assets (Level 1) (Level 2) (Level 3) NAV Total

Cash and cash equivalents $ 596 $ 9 $ — $ — $ 605

Fixed income securities:
U.S. government — 199 — — 199
U.S. government agencies — 207 — — 207
U.S. corporate — 350 — — 350
Foreign — 16 — — 16
Common and preferred stocks:
U.S. 1,028 — — — 1,028
Foreign 529 — — — 529
Funds:
Fixed income 123 — — — 123
Equities 60 617 — — 677
Foreign 60 — — — 60
Investments at NAV — — — 7,640 7,640
Total investments $ 2,396 $ 1,398 $ — $ 7,640 $ 11,434

The fair values of the Plan’s assets at December 31, 2023, by asset category, are as follows:

Quoted Prices in
Active Markets Significant Significant
for Identical Observable Unobservable
Assets Inputs Inputs
Assets (Level 1) (Level 2) (Level 3) NAV Total

Cash and cash equivalents $ 208 $ 23 $ — $ — $ 231

Fixed income securities:
U.S. government — 110 — — 110
U.S. government agencies — 175 — — 175
U.S. corporate — 338 — — 338
Foreign — 28 — — 28
Common and preferred stocks:
U.S. 979 — — — 979
Foreign 595 — — — 595
Funds:
Fixed income 127 — — — 127
Equities 94 673 — — 767
Foreign 54 — — — 54
Investments at NAV — — — 7,170 7,170
Total investments $ 2,057 $ 1,347 $ — $ 7,170 $ 10,574

33
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 16. Employee Benefit Programs (Continued)

The following is a description of the Plan’s valuation methodologies for assets and liabilities measured at
fair value. Fair value for Level 1 is based upon quoted market prices. Fair value for Level 2 is based on
quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active, and model-based valuation techniques for which all significant assumptions
are observable in the market or can be corroborated by observable market data for substantially the full
term of the assets or liabilities. Inputs are obtained from various sources, including market participants,
dealers, and brokers.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. The Clinic’s policy is to recognize transfers in and
transfers out as of the actual date of the event or change in circumstances that caused the transfer. There
were no significant transfers in 2024 or 2023.

The methods described above and those recorded at NAV may produce a fair value calculation that may
not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan
believes its valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments could
result in a different estimate of fair value at the reporting date.

The following information pertains to those alternative investments recorded at NAV in accordance with
Fair Value Measurement (Topic 820) of the FASB ASC.

At December 31, 2024, alternative investments recorded at NAV consisted of the following:

Redemption Redemption
Fair Unfunded Frequency (If Notice
Value Commitment Currently Eligible) Period

Absolute return/hedge funds (a) $ 3,919 $ 142 Monthly to annually 30–90 days
Private partnerships (b) 3,721 1,323
$ 7,640 $ 1,465

At December 31, 2023, alternative investments recorded at NAV consisted of the following:

Redemption Redemption
Fair Unfunded Frequency (If Notice
Value Commitment Currently Eligible) Period

Absolute return/hedge funds (a) $ 3,693 $ 270 Monthly to annually 30–90 days
Private partnerships (b) 3,477 1,453
$ 7,170 $ 1,723

(a) This category includes investments in absolute return/hedge funds, which are actively managed
commingled investment vehicles that derive the majority of their returns from factors other than the
directional flow of the markets in which they invest. Representative strategies include high-yield
credit, distressed debt, merger arbitrage, relative value, and long-short equity strategies. The fair
values of the investments in this category have been estimated using the NAV per share of the
investments. Investments in this category generally carry “lockup” restrictions that do not allow
investors to seek redemption in the first year after acquisition. Following the initial lockup period,
liquidity is generally available monthly, quarterly, or annually following a redemption request. Over 90
percent of the investments in this category have at least annual liquidity.

34
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 16. Employee Benefit Programs (Continued)

(b) This category includes limited partnership interests in closed-end funds that focus on venture capital,
private equity, real estate, and resource-related strategies. The fair values of the investments in this
category have been estimated using the NAV of the Plan’s ownership interest in partners’ capital.
These investments cannot be redeemed with the funds. Distributions from each fund will be received
as the underlying investments of the funds are liquidated. It is estimated that the underlying assets of
most funds will generally be liquidated over a seven- to ten-year period.

No plan assets are expected to be returned to the employer during 2025.

Other postretirement benefits:

Obligations and funded status: A summary of the changes in the benefit obligation and plan assets and
the resulting funded status of the other postretirement plans is as follows as of and for the years ended
December 31:

2024 2023
Change in projected benefit obligation:
Benefit obligation at beginning of year $ 869 $ 867
Service cost 4 4
Interest cost 45 48
Plan participants contributions 44 42
Amendments — 2
Medicare subsidy 9 3
Actuarial loss 26 10
Benefits paid (110) (107)
Estimated benefit obligation at end of year $ 887 $ 869

Change in plan assets:

Fair value of plan assets at beginning of year $ — $ —

Employer contributions 66 65
Plan participants contributions 44 42
Benefits paid (110) (107)
Fair value of plan assets at end of year $ — $ —
Funded status of the plan $ (887) $ (869)

Amounts recognized in the consolidated statements of financial position for postretirement benefits consist
of the following at December 31:

2024 2023

Current liabilities $ (61) $ (57)

Noncurrent liabilities (826) (812)
Net amount recognized $ (887) $ (869)

35
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 16. Employee Benefit Programs (Continued)

Components of net periodic benefit cost for other postretirement benefits are as follows for the years
ended December 31:

2024 2023

Service cost $ 4 $ 4
Interest cost 45 48
Amortization of:
Unrecognized prior service benefit 1 1
Unrecognized net actuarial loss (gain) 1 (1)
Net periodic benefit cost for other postretirement benefits $ 51 $ 52

The Clinic has concluded that the prescription drug benefits under its defined benefit postretirement plan
are actuarially equivalent to Medicare Part D under the Medicare Modernization Act (the Act) and that the
Clinic will receive the subsidy available under the Act.

The following reflects the expected future Medicare Part D subsidy receipts: Years ending December 31:

2025 $ 5
2026 5
2027 5
2028 5
2029 5
2030–2034 25

Plan trend rates are the annual rates of increase expected for the benefits payable from the plan; these
rates include health care cost trends plus the leveraging effect of plan design. The assumed plan trend
rate is 5.50 percent.

Pension and postretirement benefits:

Assumptions: Weighted average assumptions used to determine pension and postretirement benefit
obligations at the measurement date are as follows:

Pension Benefits Postretirement Benefits

2024 2023 2024 2023

Discount rate 5.86% 5.43% 5.74% 5.42%

Rate of compensation increase 3.69% 3.67% —% —%

36
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 16. Employee Benefit Programs (Continued)

Weighted-average assumptions used to determine net periodic pension and postretirement benefit cost
are as follows:

Pension Benefits Postretirement Benefits

2024 2023 2024 2023

Discount rate 5.43% 5.77% 5.42% 5.68%

Expected long-term return on plan assets 7.50% 7.50% N/A N/A
Rate of compensation increase 3.67% 3.70% N/A N/A

The Clinic utilizes a building block approach in determining the expected long-term rate of return for its
plan assets. First, historical data on individual asset class returns are studied. Next, the historical
correlation among and between asset class returns is studied under both normal conditions and in times
of market turbulence. Then, various mixes of asset classes are considered under multiple long-term
investment scenarios. Finally, after considering liquidity concerns related to the use of certain alternative
asset classes, the plan sponsor selects the portfolio blend that it believes will produce the highest
expected long-term return on a risk-adjusted basis.

Cash flows:

Contributions: The Clinic expects to contribute $271 to its pension plans in 2025.

Estimated future benefit payments: The following benefit payments, which reflect expected future
service, as appropriate, are expected to be paid:

Pension Postretirement
Benefits Benefits
Years ending December 31:
2025 $ 597 $ 63
2026 560 65
2027 568 66
2028 570 67
2029 579 68
2030-2034 3,018 345

In addition to the defined benefit plans, the Clinic sponsors various defined contribution benefit plans.
Expense recognized by the Clinic for those plans was $151 and $142 for 2024 and 2023, respectively.

Note 17. General and Professional Liability Insurance

The Clinic insures substantially all general and professional liability risks through a combination of a
wholly owned captive insurance company and self-insurance. The insurance program combines various
levels of self-insured retention with excess commercial insurance coverage. Actuarial consultants have
been retained to assist in the estimation of outstanding general and professional liability losses.

37
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 17. General and Professional Liability Insurance (Continued)

The Clinic’s general and professional liability as reported in the accompanying consolidated statements of
financial position was $177 and $164 at December 31, 2024 and 2023, respectively. Provisions for the
general and professional liability risks are based on an actuarial estimate of losses using the Clinic’s
actual loss data, adjusted for industry trends and current conditions, and considering an evaluation of
claims by the Clinic’s legal counsel. The provision includes estimates of ultimate costs for both reported
claims and claims incurred but not reported.

Activity in the liability is summarized as follows for the years ended December 31:

2024 2023

Balance, beginning of year $ 164 $ 159

Incurred related to captive insurance company liability:
Current year 40 35
Prior years 15 20
Total incurred 55 55
Paid related to captive insurance company liability:
Current year — (6)
Prior years (60) (40)
Total paid (60) (46)
Net change in self-insurance liability 18 (4)
Balance, end of year $ 177 $ 164

Note 18. Other Receivables, Other Current and Long-Term Assets, and Other Current and Long-
Term Liabilities

At December 31, other receivables consisted of the following:

2024 2023

Pledges receivable $ 245 $ 325

Grants receivable 160 173
Rebates receivable 85 73
Pharmacy receivable 60 74
Interest receivable 40 40
Royalty receivable 12 11
Other tax receivable 6 5
Other 99 86
Total other receivables $ 707 $ 787

38
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 18. Other Receivables, Other Current and Long-Term Assets, and Other Current and Long-
Term Liabilities (Continued)

At December 31, other current assets consisted of the following:

2024 2023

Inventories $ 253 $ 234

Prepaid expenses 173 148
Other 30 9
Total other current assets $ 456 $ 391

At December 31, other long-term assets consisted of the following:

2024 2023

Pension asset $ 2,993 $ 1,814

Trust receivables 346 218
Pledges receivable 341 346
Technology-based ventures 295 268
Oil and gas interests 254 259
Operating lease right-of-use asset 136 122
Notes receivable 78 69
Prepaid maintenance 76 79
Long-term portion of deferred tax asset 8 4
Investments in unconsolidated entities 2 164
Other 85 85
Total other long-term assets $ 4,614 $ 3,428

At December 31, other current liabilities consisted of the following:

2024 2023
Current maturities of long-term debt $ 105 $ 18
Other taxes 103 92
Current portion of professional and general liability 58 49
Current portion of long-term disability 56 50
Oil and gas liability 36 51
Short-term disability 33 34
Refunds/recoupments 30 23
Real estate tax accrual 27 28
Operating lease liability 26 22
Accrued interest 21 22
Medicare settlements liability 21 12
Current portion of workers' compensation liability 13 12
Finance lease liability 8 9
Other 92 69
Total other current liabilities $ 629 $ 491

39
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 18. Other Receivables, Other Current and Long-Term Assets, and Other Current and Long-
Term Liabilities (Continued)

At December 31, other long-term liabilities consisted of the following:

2024 2023
Deferred compensation $ 1,317 $ 1,129
Long-term disability 270 246
Operating lease liability 138 127
Professional and general liability 119 115
Electronic medical record 90 96
Retirement community obligations 88 92
Gift annuities 72 67
Financing obligations 59 60
Asset retirement obligation 55 48
Trust obligations 49 47
Workers’ compensation liability 35 32
Finance lease liability 29 27
Contract deposit 25 25
Deferred gain 18 126
Other 71 66
Total other long-term liabilities $ 2,435 $ 2,303

Note 19. Other Revenue

For the years ended December 31, other revenue consisted of the following:

2024 2023

Retail pharmacy sales $ 660 $ 530

Royalties 191 120
Retail stores 86 80
Oil and gas producing activities 83 75
Graduate medical and other education revenue 61 53
Technology commercialization, health information, and medical 46 43
products
Cafeteria revenue 41 37
Other 283 262
Total other revenue $ 1,451 $ 1,200

Note 20. Commitments and Contingencies

The Clinic has various construction projects in progress related to patient care, research, and educational
facilities. The estimated costs committed to complete the various projects at December 31, 2024 is
$5,756 all of which is expected to be expended over the next three to five years. Included in this is the $5
billion initiative for the Rochester, Minnesota campus project which includes five new buildings, and
technology and infrastructure investments.

40
Mayo Clinic

Notes to Consolidated Financial Statements (In Millions)

Note 20. Commitments and Contingencies (Continued)

While the Clinic is self-insured for a substantial portion of its general and workers’ compensation liabilities,
the Clinic maintains commercial insurance coverage against catastrophic loss. Additionally, the Clinic
maintains a self-insurance program for its long-term disability coverage. The provision for estimated self-
insured claims includes estimates of the ultimate costs for both reported claims and claims incurred but
not reported.

The Clinic is a defendant in various lawsuits arising in the ordinary course of business and records an
estimated liability for probable claims. Although the outcome of these lawsuits cannot be predicted with
certainty, management believes the ultimate disposition of such matters will not have a material effect on
the Clinic’s consolidated financial position or consolidated statement of activities.

41