Solventum, the spinoff of 3M’s health care business, is beginning its journey as Minnesota’s latest public company with a significant debt load and flatlining sales. The Maplewood-based company currently holds $8.3 billion in long-term debt and is anticipating minimal to no revenue growth in its first full year of operation. Despite only officially separating from 3M on April 1, Solventum released its first-quarter results on Thursday with a more detailed look at its business compared to 3M’s earnings report the previous week.
Although there were some positive elements in the numbers, such as total sales of $2 billion with a 0.2% increase, sales in its primary medical/surgical division saw a 0.4% decrease. On the other hand, revenue in its purification and filtration business showed a 6.1% increase. Analyst Joshua Aguilar from Morningstar in Chicago expressed optimism about Solventum’s potential for growth, highlighting its strong cash flow.
Looking ahead, Solventum has announced its intention to prioritize debt repayment for the next two years and has opted not to pay a cash dividend on its common stock or buy back shares at this time. The company’s stock dipped by 2.6% during morning trading. Analyst Matt Arnold from Edward Jones in St. Louis pointed out some of Solventum’s obstacles in an initial research report, mentioning its high debt load and slower revenue growth compared to competitors. Arnold also speculated that Solventum may need to remove some slower-growing or less profitable products from its portfolio.
3M shareholders received 80.1% of Solventum stock in the spinoff, with 3M retaining 19.9% of the shares. However, 3M plans to divest these shares within five years. Despite these challenges, Solventum has not provided CEO Bryan Hanson for comment on the situation.