3M Spin Off Solventum Targets Higher Margins, EPS Growth In 2025-2028 Strategy

On Thursday, Solventum ( SOLV ) hosted its 2025 Investor Day, during which it outlined its strategic priorities, its business segments, and its long-range plan (LRP) to drive growth and value creation.

Formerly 3 M’s  Health Care Business, Solventum ( SOLV ), started trading as a newly independent healthcare company in April 2024.

The company offers solutions for wound care, surgery, dental prevention, procedures, orthodontics, and software.

“Solventum has tremendous potential, with attractive businesses, large and growing markets, and highly regarded brands. We have undertaken a significant transformation to unlock the potential of our Medical Surgical, Dental Solutions, and Health Information Systems businesses, positioning the company to drive accelerated growth and create shareholder value,” said Bryan Hanson, CEO of Solventum ( SOLV ).

“Solventum has entered 2025 as a more focused company…Our long-range plan demonstrates the progress we made in the last year and reflects our confidence in our ability to accelerate sales growth, expand margins, deliver EPS growth, and improve free cash flow,” Hanson concluded.

Thermo Fisher Scientific Inc. ( TMO )  agreed to acquire Solventum’s Purification & Filtration (P&F) business for approximately $4.1 billion in cash in February.

Solventum’s Purification & Filtration business provides purification and filtration technologies for the production of biologics, medical technologies, and industrial applications.

Solventum ( SOLV ) reaffirmed its fiscal year 2025 guidance and announced its long-range plan (LRP) for 2025 through 2028:

• Accelerate organic sales growth of 4% to 5% in 2028.
• Expand operating margins to be 23% to 25% in 2028 (inclusive of ~200bps 3M ( MMM ) COGS increase).
• Generate EPS CAGR of 10% over the 3 years ending 2028
• Drive free cash flow conversion of 80%+

Solventum ( SOLV ) reported fourth-quarter adjusted EPS of $1.41, beating the consensus of $1.32, and sales of $2.07 billion, beating the consensus of $2.05 billion.

The company forecasts 2025 adjusted EPS of $5.45-$5.65, compared to a consensus of $5.50, and organic sales growth of +1.0% to +2.0%.

Price Action: SOLV stock is down 1.57% at $73.81 at the last check Friday.

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