Solventum Corporation
02/27/2026 | Press release | Distributed by Public on 02/27/2026 12:41
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company's consolidated financial statements and corresponding notes elsewhere in this Annual Report on Form 10-K. The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Solventum for the years ended December 31, 2025 and 2024. Discussion, analysis and comparisons of the year ended December 31, 2023 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report on Form 10-K for the year ended December 31, 2024 filed on February 28, 2025. This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in "Risk Factors." See "Cautionary Note Regarding Forward-Looking Statements."
All amounts discussed are in millions of U.S. dollars, unless otherwise indicated. Amounts reported within this Annual Report are rounded to the nearest million and the sum of the components may not equal the total amount reported due to rounding. Additionally, certain columns and rows within tables may not sum due to rounding.
Unless the context otherwise requires, references to "Solventum" and the "Company" refer to (i) 3M's Health Care Business prior to the Spin-Off as a carve-out business of 3M and (ii) Solventum Corporation and its subsidiaries following the Spin-Off.
Transition to Standalone Company
Solventum utilized allocations and carve-out methodologies through the date of the Spin-Off to prepare combined financial statements. The consolidated financial statements herein for periods prior to the Spin-Off may not be indicative of the Company's future performance, do not necessarily include the actual expenses that would have been incurred, and may not reflect our results of operations, financial position, and cash flows had we been a separate, standalone company during the historical periods presented.
In particular, Solventum benefited from 3M's long operating history, reputation and well-known brand. Following the separation, Solventum is operating under its own brand, and accordingly may be negatively impacted due to the loss of benefits conferred by 3M's brand recognition and reputation. In addition, the debt obligations incurred by Solventum in connection with the separation will adversely affect its profitability and could affect its ability to use its cash flow for investing in the business, strategic transactions, including mergers and acquisitions, and returning capital. See Note 1, "Significant Accounting Policies - Organization and Description of Businessand Basis of Presentation" to the consolidated financial statements and Part 1, Item 1A "Risk Factors" for additional information.
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of Solventum's financial statements with a narrative from the perspective of management. Solventum's MD&A is presented in the following sections:
•Overview
•Results of Operations
•Performance by Business Segment
•Geographic Area Supplemental Information
•Critical Accounting Estimates
•New Accounting Pronouncements
•Financial Condition and Liquidity
•Financial Instruments
Overview
Solventum is a leading global healthcare company developing, manufacturing, and commercializing a broad portfolio of solutions that leverages deep material science, data science, and digital capabilities to address critical customer and patient needs. We constantly seek to enable the improvement of standards of care and move healthcare forward with innovation powered by insights, clinical intelligence, technology, and manufacturing expertise. Our 70+ year history of discovering and innovating advanced solutions has helped us solve our customers' toughest challenges and become a trusted partner.
Operating Segments and Sales Change Information
Solventum manages its operations in three reportable business segments: MedSurg, Dental Solutions, and Health Information Systems. On February 25, 2025, the Company entered into a Transaction Agreement to sell its Purification and Filtration business to Thermo Fisher Scientific Inc. ("Buyer"). On June 25, 2025, the Company and Buyer entered into an Amended and Restated Transaction Agreement to exclude the Company's drinking water filtration business (the "Water Business") from the scope of the Purification and Filtration business to be acquired by Buyer (such acquired business, the "Business"). On September 1, 2025, Solventum completed the sale of the Business to the Buyer in accordance with the terms of the Agreement. The cash consideration paid to Solventum at closing was approximately $4 billion. Refer to Note 3, "Acquisitions and Divestitures" for additional information.
References are made to organic sales change, which is defined as the change in net sales, absent the separate impacts on sales from foreign currency translation and acquisitions, net of divestitures. Constant currency, as reflected in the tables below, is defined as the change in net sales absent the impact on sales from foreign currency translation. Other, as comprised in the tables below, includes acquisition and divestiture-related activities. Acquisitions include sales from Acera that was acquired in December 2025, non-health care related supply agreements that conveyed from 3M to the Company at Spin-Off and sales from new supply agreements with 3M that commenced at Spin-Off. Divestiture impacts include lost sales from the Company's Purification and Filtration business that was sold in September 2025, certain health care businesses retained by 3M India in connection with the Spin-Off, as well as impacts from other immaterial divested businesses. Solventum believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.
Healthcare Market Drivers
Changing demographics
An aging population, the prevalence and incidence rates of chronic conditions, and a rising middle class are driving the demand for improved access to quality care.
Optimizing workflows to improve care quality and operational efficiency
Of the $5.3 trillion in annual U.S. healthcare spending, an estimated 25% represents administrative costs that do not contribute to health outcomes and which we believe to be potentially wasteful based on overall spending data reported by the Centers for Medicare & Medicaid Services in the NHE Fact Sheet (available on CMS.gov as of January 14, 2026) and administrative spending estimates published in JAMA (Shrank et. al., Waste in the US Health Care System: Estimated Costs and Potential for Savings, published October 7, 2019). As healthcare providers and payers face increasing reimbursement constraints and evolving payment models, the need to reduce avoidable administrative costs has become more acute. Our solutions are designed to optimize workflows, enabling clinicians to be more productive by spending less time on administrative tasks and more time focused on improving the patient care experience. Our solutions also support reducing infections and complications that lead to an increase in avoidable administrative and clinical costs.
Increasing digital technology and data-driven care delivery
Both clinicians and patients have shifted their preferences towards utilizing digitally enabled solutions to provide data-driven care. Whether it is interactions with patients through a digital interface or the use of data, analytics, and artificial intelligence (AI) to support informed health decisions, the need for digital tools in the healthcare industry has grown over time. Our solutions integrate digital processes, AI-enabled capabilities and data in multiple ways and across different parts of the healthcare industry and are intended to enable efficient and effective delivery of care.
Shifting care from the hospital to lower-cost care sites
Although hospitals continue to be a core site for delivery of care, patients are increasingly looking for flexibility of care when and where they need it. Alternative care sites, such as ambulatory surgery centers, wound care clinics, retail pharmacies, and the home, are more affordable and accessible to patients. We believe our solutions enable clinicians to extend their care delivery from acute to ambulatory to home settings without compromising the quality of care and while reducing the total cost of care.
Increasing demand for personalized care
Engaging patients in a personalized way allows clinicians to provide a better care experience while improving outcomes and reducing costs. This spans several areas of healthcare, including customized orthodontic aligner treatments, and follow-up wound care at home. We believe our solutions deliver personalized care options in a way that is patient-centric, scalable, and cost-effective.
Our ability to take advantage of these market opportunities will be subject to various risks, including general economic, business and market dynamic risks, the impact of our separation from 3M; and the cost to service the debt we incurred in connection with the separation. See Part I, Item 1A, "Risk Factors" in this Annual Report on Form 10-K, for a discussion of these risks, which you should consider carefully.
Sales and operating income by business segment:
The following tables contain sales and operating results by business segment for all periods presented. Refer to the section entitled "-Performance by Business Segment" below for discussion of sales change and operating performance. Refer to Note 18 to the consolidated financial statements for additional information on the Company's business segments.
Segment and Total Company Net Sales
| Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| (Millions) | 2025 | 2024 | Reported Growth |
Currency Impact
|
Constant Currency | Other | Organic Growth | |||||||||||||||||||||||||||||||||||||
| Segment Sales | ||||||||||||||||||||||||||||||||||||||||||||
| Advanced Wound Care | $ | 1,883 | $ | 1,835 | 2.6 | % | 0.5 | % | 2.1 | % | 0.1 | % | 2.0 | % | ||||||||||||||||||||||||||||||
| Infection Prevention and Surgical Solutions | 2,934 | 2,802 | 4.7 | 0.5 | 4.2 | (0.4) | 4.5 | |||||||||||||||||||||||||||||||||||||
| MedSurg | 4,817 | 4,637 | 3.9 | 0.6 | 3.3 | (0.2) | 3.5 | |||||||||||||||||||||||||||||||||||||
| Dental Solutions | 1,349 | 1,295 | 4.2 | 1.1 | 3.1 | (0.2) | 3.3 | |||||||||||||||||||||||||||||||||||||
| Health Information Systems | 1,360 | 1,306 | 4.1 | 0.2 | 3.9 | - | 4.0 | |||||||||||||||||||||||||||||||||||||
| Purification and Filtration | 497 | 709 | (29.9) | 1.1 | (31.0) | (36.5) | 5.5 | |||||||||||||||||||||||||||||||||||||
| All Other | 302 | 306 | (1.5) | 0.3 | (1.8) | 4.3 | (6.1) | |||||||||||||||||||||||||||||||||||||
| Total Company | $ | 8,325 | $ | 8,254 | 0.9 | % | 0.6 | % | 0.3 | % | (3.0) | % | 3.3 | % | ||||||||||||||||||||||||||||||
| Year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| (Millions) | 2024 | 2023 | Reported Growth |
Currency Impact
|
Constant Currency | Other | Organic Growth | |||||||||||||||||||||||||||||||||||||
| Segment Sales | ||||||||||||||||||||||||||||||||||||||||||||
| Advanced Wound Care | $ | 1,835 | $ | 1,826 | 0.5 | % | (0.3) | % | 0.8 | % | (0.1) | % | 0.9 | % | ||||||||||||||||||||||||||||||
| Infection Prevention and Surgical Solutions | 2,802 | 2,805 | (0.1) | (0.8) | 0.7 | (0.7) | 1.4 | |||||||||||||||||||||||||||||||||||||
| MedSurg | 4,637 | 4,632 | 0.1 | (0.6) | 0.7 | (0.5) | 1.2 | |||||||||||||||||||||||||||||||||||||
| Dental Solutions | 1,295 | 1,329 | (2.6) | (0.7) | (2.0) | (1.5) | (0.4) | |||||||||||||||||||||||||||||||||||||
| Health Information Systems | 1,306 | 1,285 | 1.6 | - | 1.6 | - | 1.6 | |||||||||||||||||||||||||||||||||||||
| Purification and Filtration | 709 | 689 | 3.0 | (0.6) | 3.7 | (0.9) | 4.6 | |||||||||||||||||||||||||||||||||||||
| All Other | 306 | 262 | 16.7 | (0.9) | 17.6 | 18.8 | (1.2) | |||||||||||||||||||||||||||||||||||||
| Total Company | $ | 8,254 | $ | 8,197 | 0.7 | % | (0.5) | % | 1.2 | % | - | % | 1.2 | % | ||||||||||||||||||||||||||||||
Segment and Total Company Operating Income
| Year ended December 31, | ||||||||||||||||||||
| (Millions) | 2025 | 2024 | 2025 vs 2024 change | |||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||
| MedSurg | $ | 810 | $ | 887 | (8.6) | % | ||||||||||||||
| Dental Solutions | 346 | 350 | (1.1) | |||||||||||||||||
| Health Information Systems | 496 | 431 | 15.0 | |||||||||||||||||
| Purification and Filtration | 96 | 74 | 29.7 | |||||||||||||||||
| All Other | 42 | 30 | 40.0 | |||||||||||||||||
| Corporate and Unallocated | 390 | (736) | 153.0 | |||||||||||||||||
| Total Company | $ | 2,181 | $ | 1,036 | 110.5 | % | ||||||||||||||
| Year ended December 31, | ||||||||||||||||||||
| (Millions) | 2024 | 2023 | 2024 vs 2023 change | |||||||||||||||||
| Segment Operating Income | ||||||||||||||||||||
| MedSurg | $ | 887 | $ | 1,107 | (19.9) | % | ||||||||||||||
| Dental Solutions | 350 | 442 | (20.8) | |||||||||||||||||
| Health Information Systems | 431 | 423 | 1.9 | |||||||||||||||||
| Purification and Filtration | 74 | 111 | (33.3) | |||||||||||||||||
| All Other | 30 | 51 | (41.2) | |||||||||||||||||
| Corporate and Unallocated | (736) | (442) | 66.5 | |||||||||||||||||
| Total Company | $ | 1,036 | $ | 1,692 | (38.8) | % | ||||||||||||||
Net Sales by Geographic Area
While the Company manages its businesses globally and believes its business segment results are the most relevant measure of performance, the Company also utilizes geographic area data as a secondary performance measure. Sales are generally reported within the geographic area based on the location of the customer taking possession of the products or in which services are rendered. Additional geographic financial information related to the Company's operations is provided in Note 18 in the accompanying consolidated financial statements.
Percent change information compares year ended December 31, 2025 and December 31, 2024 with the same periods for the prior year, unless otherwise indicated.
| Year ended December 31, 2025 | ||||||||||||||||||||
| (Millions) | United States | International | Worldwide | |||||||||||||||||
| Net sales | $ | 4,668 | $ | 3,657 | $ | 8,325 | ||||||||||||||
| % of worldwide sales | 56.1 | % | 43.9 | % | 100.0 | % | ||||||||||||||
| Increase/(decrease) | ||||||||||||||||||||
| Organic growth | 3.7 | % | 2.7 | % | 3.3 | % | ||||||||||||||
| Other | (1.3) | (5.1) | (3.0) | |||||||||||||||||
| Constant Currency | 2.4 | (2.4) | 0.3 | |||||||||||||||||
| Currency Impact | - | 1.4 | 0.6 | |||||||||||||||||
| Reported Growth | 2.4 | % | (1.0) | % | 0.9 | % | ||||||||||||||
| Year ended December 31, 2024 | ||||||||||||||||||||
| (Millions) | United States | International | Worldwide | |||||||||||||||||
| Net sales | $ | 4,559 | $ | 3,695 | $ | 8,254 | ||||||||||||||
| % of worldwide sales | 55.2 | % | 44.8 | % | 100.0 | % | ||||||||||||||
| Increase/(decrease) | ||||||||||||||||||||
| Organic growth | 1.2 | % | 1.4 | % | 1.2 | % | ||||||||||||||
| Other | 0.8 | (1.0) | - | |||||||||||||||||
| Constant Currency | 2.0 | 0.4 | 1.2 | |||||||||||||||||
| Currency Impact | - | (1.2) | (0.5) | |||||||||||||||||
| Reported Growth | 2.0 | % | (0.8) | % | 0.7 | % | ||||||||||||||
Additional information beyond what is included in the preceding table is as follows:
Year ended 2025 results
•In the United States geographic area, both total sales and organic sales increased. Organic growth was led by MedSurg and Health Information Systems. Other is comprised of lost sales due to the divestiture of the Purification and Filtration business in September 2025.
•In the International geographic area, total sales declined while organic sales increased. Organic growth was led by MedSurg and Dental Solutions. Other is comprised of lost sales due to the divestiture of the Purification and Filtration business in September 2025.
Year ended 2024 results
•In the United States geographic area, both total sales and organic sales increased. Organic growth was led by MedSurg and Health Information Systems.
•In the International geographic area, total sales decreased while organic sales increased. Organic growth was led by MedSurg and Purification and Filtration.
Managing currency risks
Prior to April 1, 2024, Solventum indirectly participated in 3M's centrally managed hedging program. Starting in the second quarter of 2024, Solventum established its own hedging program. Refer to Note 11 to the consolidated financial statements for additional details.
Foreign currency had a positive worldwide impact on sales for the year ended December 31, 2025 compared to 2024. Solventum estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $6 million in 2025.
The stronger U.S. dollar had a negative worldwide impact on sales for the year ended December 31, 2024 compared to 2023. Solventum estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $23 million in 2024.
Financial condition
Refer to the section entitled "-Financial Condition and Liquidity" below for a discussion of items impacting cash flows.
Results of Operations
Net Sales
Refer to the preceding "-Overview" section and the "-Performance by Business Segment" section later in MD&A for discussion of sales change.
Costs of Sales
| Year ended Year ended December 31, | ||||||||||||||||||||||||||||||||
| (Percent of corresponding net sales) | 2025 | 2024 | 2023 | 2025 vs 2024 | 2024 vs 2023 | |||||||||||||||||||||||||||
| Cost of product | 53.6 | % | 50.0 | % | 48.0 | % | 3.6 | % | 2.0 | % | ||||||||||||||||||||||
| Cost of software and rentals | 23.9 | 25.7 | 25.3 | (1.8) | 0.4 | |||||||||||||||||||||||||||
Costs of Product
Costs of product includes manufacturing, engineering and logistics costs. The Company operates a global supply chain and sourcing organization, including product sourced under master supply and transition manufacturing agreements with 3M. As a result, the Company is impacted by changes in the global regulatory and economic environment, including tariffs. The evolving regulatory and economic environment may impact our cost or ability to source products. To the extent possible the Company takes actions to offset these costs or identify alternative sources of supply.
Costs of product, measured as a percent of sales of product, increased in 2025 when compared to 2024. The increase was driven by the impact of new tariffs of approximately $55 million, the full year impact from inventory sourced under the master supply and transition manufacturing agreements with 3M, and higher logistics costs, partially offset by benefits from cost savings programs.
Costs of product, measured as a percent of sales of product, increased in 2024 when compared to 2023. The increase was driven by increased costs due to the impact of higher costs on inventory sourced under the master supply and transition manufacturing agreements with 3M and due to the cost of other transition support provided by 3M that have been incurred since Spin-Off.
Costs of Software and Rentals
Costs of software and rentals includes compensation-related costs associated with installation, training and maintenance for our software products, and depreciation, maintenance and refurbishment costs and logistics costs related to our hardware rental units.
Costs of software and rentals, measured as a percent of sales of software and rentals, decreased in 2025 as compared to 2024. The decrease was due to the impact of lower external license fees, price and sales mix, primarily driven by higher sales of our revenue cycle management solution.
Costs of software and rentals, measured as a percent of sales of software and rentals, increased in 2024 as compared to 2023. This increase was driven by higher compensation costs.
Operating Expenses
| Year ended December 31, | ||||||||||||||||||||||||||||||||
| (Percent of total net sales) | 2025 | 2024 | 2023 | 2025 vs 2024 | 2024 vs 2023 | |||||||||||||||||||||||||||
| Selling, general and administrative (SG&A) | 37.0 | % | 33.7 | % | 28.0 | % | 3.3 | % | 5.7 | % | ||||||||||||||||||||||
| Research and development (R&D) | 8.9 | 9.4 | 9.2 | (0.5) | 0.2 | |||||||||||||||||||||||||||
| Gain on sale of business | 18.6 | - | 0.7 | 18.6 | (0.7) | |||||||||||||||||||||||||||
| Operating Income | 26.2 | 12.6 | 20.6 | 13.6 | (8.0) | |||||||||||||||||||||||||||
Selling, General and Administrative
SG&A, measured as a percent of total net sales, increased in 2025 when compared to 2024. The increase was driven by costs incurred to separate the Purification and Filtration business, higher compensation, including equity-based awards, and higher costs associated with both initial stand-up and ongoing operations to support a standalone company.
SG&A, measured as a percent of total net sales, increased in 2024 when compared to 2023. The increase was driven by higher compensation, including equity-based awards, and higher costs associated with both initial stand-up and ongoing operations to support a standalone company.
Research and Development
R&D, measured as a percent of total net sales, decreased slightly in 2025 when compared to 2024 primarily due to reimbursement of a portion of our technical development costs from 3M related to our supply chain separation.
R&D, measured as a percent of total net sales, increased slightly in 2024 when compared to 2023 due to initial stand-up costs. The Company continues to prioritize investment initiatives.
Gain on Sale of Business
The gain on sale of business primarily relates to the Company's completed sale of the Purification and Filtration business in the third quarter of 2025, which resulted in a net gain of $1.5 billion for 2025.
Interest Expense, Net, Loss on Debt Extinguishment, Net, and Other Expense (Income), Net
| Year ended December 31, | ||||||||||||||||||||
| (Millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Interest expense, net | $ | 347 | $ | 367 | $ | - | ||||||||||||||
| Loss on debt extinguishment, net | 82 | - | - | |||||||||||||||||
| Other expense (income), net | 39 | 64 | 25 | |||||||||||||||||
Interest expense, net includes interest accrued on debt obligations, offset by interest income from cash and marketable securities. Interest expense, net decreased in 2025 as compared to 2024 due to lower interest expense as a result of lower debt outstanding. Interest expense, net increased in 2024 as compared to 2023 due to interest incurred on the February 2024 issuance of senior notes and March 2024 draw on the senior term loan credit facilities. Refer to Note 9 to the consolidated financial statements for more information. This increase was partially offset by interest earned from cash and marketable securities held during the period.
Loss on debt extinguishment, net includes charges incurred in the third quarter of 2025 from the differential between carrying value and the amount paid to acquire the tendered Senior Notes and related expenses. Refer to Note 9 to the consolidated financial statements for additional information. These charges were partially offset by the gain from interest rate swaps entered into and subsequently settled in connection with the sale of the Purification and Filtration business. Refer to Note 11 to the consolidated financial statements for additional information.
Other expense (income), net includes the non-service component of periodic pension cost, investment gains and losses, and foreign currency transaction gain (loss). Other expense (income), net decreased in 2025 as compared to 2024 primarily due to charges associated with the substantial liquidation of foreign operations completed as part of our separation from 3M. Other expense (income), net increased in 2024 as compared to 2023 resulting from charges associated with the substantial liquidation of foreign operations completed as part of our separation from 3M in addition to foreign currency impacts and investment losses.
Provision (benefit) for Income Taxes:
| Year ended December 31, | ||||||||||||||||||||
| (Percent of pre-tax income/loss) | 2025 | 2024 | 2023 | |||||||||||||||||
| Effective tax rate | 9.2 | % | 20.9 | % | 19.3 | % | ||||||||||||||
The change in the effective tax rate in 2025 when compared to 2024 was primarily driven by impacts associated with the sale of the Purification and Filtration business. Refer to Note 8 to the consolidated financial statements for additional detail on the Company's effective tax rate.
Performance by Business Segment
Note 18 to the consolidated financial statements provides an overview of Solventum's reportable business segments. Upon closing the sale of our Purification and Filtration business, we primarily manage our operations in three business segments: MedSurg, Dental Solutions, and Health Information Systems. Our Chief Operating Decision Maker evaluates segment operating performance using net sales and business segment operating income.
All Other
All Other primarily consists of the Water Business that was retained after the sale of the Purification and Filtration Business. All Other also includes sales and cost of sales related to our agreements to supply 3M and other supply agreements assumed by the Company at Spin-Off related to legacy 3M businesses, which were historically included within Corporate and Unallocated.
Corporate and Unallocated
Certain items are maintained at the corporate level and not allocated to the segments ("Corporate and Unallocated"). Corporate and Unallocated primarily includes amortization of acquired intangible assets, restructuring and related charges, timing related benefits or costs associated with capitalized manufacturing variances, charges and recoveries related to certain litigation, transaction and employee retention costs related to the acquisition of Acera, and gains on sale of businesses. In addition, Corporate and Unallocated includes Spin-Off and separation related costs. Spin-Off and separation related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone company, including system implementations, manufacturing relocations, legal entity separations, certain equity awards granted as part of the Spin-Off, profit mark-ups on transition service arrangements with 3M and other one-time costs. Corporate and Unallocated also includes income and costs related to transition service agreements entered into in connection with the sale of the Purification and Filtration business.
Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.
Operating Business Segments
Information related to the Company's segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.
MedSurg (57.9% of consolidated sales for the year ended December 31, 2025 )
| Year ended December 31, | ||||||||||||||||||||
| (Millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Net sales | $ | 4,817 | $ | 4,637 | $ | 4,632 | ||||||||||||||
|
Increase/(decrease)
|
||||||||||||||||||||
| Organic growth | 3.5 | % | 1.2 | % | ||||||||||||||||
|
Other
|
(0.2) | (0.5) | ||||||||||||||||||
| Constant currency | 3.3 | 0.7 | ||||||||||||||||||
| Currency impact | 0.6 | (0.6) | ||||||||||||||||||
| Reported growth | 3.9 | % | 0.1 | % | ||||||||||||||||
|
Business segment operating income (millions)
|
$ | 810 | $ | 887 | $ | 1,107 | ||||||||||||||
| Percent change | (8.6) | % | (19.9) | % | ||||||||||||||||
| Percent of sales | 16.8 | % | 19.1 % | 23.9 % | ||||||||||||||||
Year 2025 results:
Sales in MedSurg were up 3.9%:
•Organic growth was driven by volumes in our Infection Prevention and Surgical Solutions business, led by I.V. site management. Growth within our Advanced Wound Care business was led by volume growth in negative pressure wound therapy.
•Other primarily includes lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.
•Foreign currency translation positively impacted sales by 0.6%.
Business segment operating income margin decreased when compared to the same period last year. The decrease was primarily driven by the impact of higher product costs due to tariffs, logistics and a full year of supply agreement mark-ups from 3M.
Year 2024 results:
Sales in MedSurg were up 0.1%:
•Organic sales growth of 1.2% was driven by volumes, primarily due to benefits from medical OEM products, I.V. site management, and single-use negative pressure wound therapy, partially offset by declines in traditional negative pressure wound therapy and sterilization assurance products.
•Other includes lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.
•Foreign currency translation negatively impacted sales by (0.6%).
Business segment operating income margin decreased when compared to the same period last year. The decrease was driven by higher costs to stand-up and operate our standalone structure after Spin-Off.
Dental Solutions (16.2% of consolidated sales for the year ended December 31, 2025)
| Year ended December 31, | ||||||||||||||||||||
| (Millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Net sales | $ | 1,349 | $ | 1,295 | $ | 1,329 | ||||||||||||||
|
Increase/(decrease)
|
||||||||||||||||||||
| Organic growth | 3.3 | % | (0.4) | % | ||||||||||||||||
|
Other
|
(0.2) | (1.5) | ||||||||||||||||||
| Constant currency | 3.1 | (2.0) | ||||||||||||||||||
| Currency impact | 1.1 | (0.7) | ||||||||||||||||||
| Reported growth | 4.2 | % | (2.6) | % | ||||||||||||||||
| Business segment operating income | $ | 346 | $ | 350 | $ | 442 | ||||||||||||||
| Percent change | (1.1) | % | (20.8) | % | ||||||||||||||||
| Percent of sales | 25.6 | % | 27.0 | % | 33.3 | % | ||||||||||||||
Year 2025 results:
Sales in Dental Solutions were up 4.2%:
•Organic growth was primarily driven by new product volume growth in restorative and prevention solutions, partially offset by a decline in traditional orthodontic products.
•Other is driven by lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.
•Foreign currency translation positively impacted sales by 1.1%.
Business segment operating income margin decreased when compared to the same period last year as a result of higher logistics costs, tariffs and other costs to operate our standalone structure after Spin-Off.
Year 2024 results:
Sales in Dental Solutions were down (2.6%):
•Volume declines associated with softening end-market demand were partially offset by the favorable impact of prior year price actions.
•Other is primarily driven by lost sales from the Company's dental anesthetics business that was sold in August 2023 as well as lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.
•Foreign currency translation negatively impacted sales by (0.7%).
Business segment operating income margin decreased when compared to the same period last year as a result of higher costs to stand-up and operate our standalone structure after Spin-Off.
Health Information Systems (16.3% of consolidated sales for year ended December 31, 2025)
| Year ended December 31, | ||||||||||||||||||||
| (Millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Net sales | $ | 1,360 | $ | 1,306 | $ | 1,285 | ||||||||||||||
|
Increase/(decrease)
|
||||||||||||||||||||
| Organic growth | 4.0 | % | 1.6 | % | ||||||||||||||||
|
Other
|
- | - | ||||||||||||||||||
| Constant currency | 3.9 | 1.6 | ||||||||||||||||||
| Currency impact | 0.2 | - | ||||||||||||||||||
| Reported growth | 4.1 | % | 1.6 | % | ||||||||||||||||
| Business segment operating income | $ | 496 | $ | 431 | $ | 423 | ||||||||||||||
| Percent change | 15.0 | % | 1.9 | % | ||||||||||||||||
| Percent of sales | 36.5 | % | 33.0 | % | 32.9 | % | ||||||||||||||
Year 2025 results:
Sales in Health Information Systems were up 4.1%:
•Positive organic growth was driven by expanded adoption of our Solventum™ 360 EncompassTMand performance management solutions.
•Clinician productivity solutions declined primarily due to impacts from changing market conditions.
•Foreign currency translation positively impacted sales by 0.2%.
Business segment operating income margin increased when compared to the same period last year, driven by sales price growth, product mix and lower external license fees.
Year 2024 results:
Sales in Health Information Systems were up 1.6%:
•Positive sales growth was driven by continued adoption of our 3MTM360 EncompassTM.
•Clinician productivity solutions declined primarily due to impacts from changing market conditions.
Business segment operating income margin increased slightly when compared to the same period last year as product mix benefit due to higher software sales and lower professional services was partially offset by higher compensation costs.
Purification and Filtration (6.0% of consolidated sales for the year ended December 31, 2025)
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
|
Net sales (millions)
|
$ | 497 | $ | 709 | $ | 689 | ||||||||||||||
|
Increase/(decrease)
|
||||||||||||||||||||
| Organic growth | 5.5 | % | 4.6 | % | ||||||||||||||||
|
Other
|
(36.5) | (0.9) | ||||||||||||||||||
| Constant currency | (31.0) | 3.7 | ||||||||||||||||||
| Currency impact | 1.1 | (0.6) | ||||||||||||||||||
| Reported growth | (29.9) | % | 3.0 | % | ||||||||||||||||
| Business segment operating income (millions) | $ | 96 | $ | 74 | $ | 111 | ||||||||||||||
| Percent change | 29.7 | % | (33.3) | % | ||||||||||||||||
| Percent of sales | 19.3 | % | 10.4 | % | 16.1 | % | ||||||||||||||
Year 2025 results:
Sales in Purification and Filtration were down (29.9)%:
•Organic growth was driven by growth in both bioprocessing filtration and industrial filtration, which benefited from added production capacity, partially offset by declines in membrane OEM products.
•Other is driven by lost sales after the business was sold in September 2025.
•Foreign currency translation positively impacted sales by 1.1%.
Business segment operating income margin increased due to volume growth, favorable sales mix and a benefit resulting from the Company stopping depreciation on assets classified as held for sale, partially offset by higher costs to operate our standalone structure after Spin-Off.
Year 2024 results:
Sales in Purification and Filtration were up 3.0%:
•Primarily driven by higher volume growth in our bioprocessing filtration product category. This growth was partially offset by our membranes OEM.
•Other includes lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.
•Foreign currency translation negatively impacted sales by (0.6)%.
Business segment operating income margin decreased primarily due to the negative impact from costs to stand-up and operate our standalone structure after Spin-Off.
Geographic Area Supplemental Information
| Employees as of December 31, |
Capital Spending for the year ended December 31, |
Property, Plant and Equipment - net as of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Millions, except Employees) | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| United States | 10,308 | 10,919 | 10,906 | $ | 200 | $ | 229 | $ | 160 | $ | 773 | $ | 893 | $ | 770 | |||||||||||||||||||||||||||||||||||||||||
| International | 10,276 | 11,062 | 11,101 | 179 | 151 | 130 | 553 | 729 | 687 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total Company | 20,584 | 21,981 | 22,007 | $ | 379 | $ | 380 | $ | 290 | $ | 1,326 | $ | 1,622 | $ | 1,457 | |||||||||||||||||||||||||||||||||||||||||
Employment:
Employment decreased in 2025 when compared to 2024 and decreased slightly in 2024 when compared to 2023. The above table includes the impact of acquisitions, divestitures, and other actions.
Capital Spending and Property, Plant and Equipment - Net:
Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency. The Company is increasing its investment in manufacturing and sourcing capability in order to more closely align its production capability with its sales in major geographic areas in order to best serve its customers throughout the world with proprietary, automated, efficient, safe and sustainable processes. Capital spending is discussed in more detail below in the section entitled "-Cash Flows from Investing Activities."
Critical Accounting Estimates
Information regarding significant accounting policies is included in Note 1 of the accompanying consolidated financial statements. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates.
The Company considers the items below to be critical accounting estimates. Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company.
Legal Proceedings
Assessments of lawsuits and claims can involve a series of complex judgments about future events, the outcomes of which are inherently uncertain, and can rely heavily on estimates and assumptions. The Company accrues an estimated liability for legal proceeding claims that are both probable and reasonably estimable in accordance with Accounting Standard Codification (ASC) 450, Contingencies. Please refer to the section entitled "Process for Disclosure and Recording of Liabilities Related to Legal Proceedings" (contained in "Legal Proceedings" in Note 12 to the accompanying consolidated financial statements) for additional information about such estimates.
Goodwill and Intangible Assets
The Company makes certain estimates and judgments in impairment assessments of goodwill. Goodwill is tested for impairment annually in the fourth quarter of each year, as further discussed below, and is tested between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. The Company may assess qualitative factors for its reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount including goodwill. Alternatively, the Company may bypass this qualitative assessment and perform a quantitative goodwill impairment test.
Impairment testing for goodwill is done at a reporting unit level, with all goodwill assigned to a reporting unit. An impairment loss would be recognized when the carrying amount of the reporting unit's net assets exceeds the estimated fair value of the reporting unit. The estimated fair value of a reporting unit is determined based on a market approach using comparable company information such as EBITDA (earnings before interest, taxes, depreciation and amortization) multiples. The Company also performs a discounted cash flow analysis for certain reporting units where the market approach indicates additional review is warranted. A discounted cash flow analysis involves key assumptions including projected sales, EBITDA margins, capital expenditures, and discount rates. Changes in reporting unit earnings, comparable company information, and expected future cash flows, as well as underlying market and overall economic conditions, among other factors, make these estimates subject to uncertainty. The Company did not perform a discounted cash flow analysis for any reporting unit for any period presented, as the market approach analysis resulted in sufficient headroom between the fair value and the carrying value for each of the Company's reporting units.
As of December 31, 2025, goodwill totaled approximately $5.7 billion. The Company has four reporting units that are assigned goodwill, with the MedSurg reporting unit accounting for approximately 74 percent of the goodwill balance. In connection with our annual testing in the fourth quarter of 2025, no qualitative indicators of impairment were identified for any of the Company's reporting units. For reporting units where quantitative testing was completed, the fair value exceeded the carrying value of the reporting unit by at least 65 percent. On December 23, 2025, subsequent to our annual impairment test, the Company completed the acquisition of Acera. Preliminary goodwill related to the acquisition was recognized and is included in the balance of our MedSurg reporting unit at December 31, 2025. The Company will continue to monitor its reporting units for any triggering events or other indicators of impairment.
The Company acquires intangible assets in connection with business combinations, primarily developed technology, trade names, and customer relationships. These acquired intangible assets are recorded at their estimated fair value as of the acquisition date. The fair values of acquired intangible assets are determined using information available on the acquisition date and are based on estimates and assumptions that management believes are reasonable. These estimates may include the amount
and timing of projected future cash flows attributable to each class of intangible asset, the discount rates used to present value those cash flows, and the assessment of the asset's expected life cycle. Significant assumptions vary by the class of intangible asset and the valuation technique applied.
New Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note 1 to the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Financial Condition and Liquidity
Solventum's principal sources of liquidity are our existing cash and cash equivalents, cash generated from operations, and access to both our revolving credit facility and commercial paper program, which the Company believes will satisfy our foreseeable operating needs, capital expenditures, and debt service requirements. Discretionary cash may be allocated to strategic acquisitions, share repurchases, or repayment of debt obligations. The Company's cash position reflects business results and a global cash management strategy that leverages liquidity management along with analyzing economic factors and tax considerations.
Debt and Credit Facilities
Refer to Note 9 of the Company's consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
The Company had approximately $82 million in bank guarantees, surety bonds, and other similar instruments issued and outstanding at December 31, 2025. These instruments are utilized in connection with normal business activities.
Commercial Paper
On March 4, 2024, the Company entered into a commercial paper program that allows it to issue up to $2.0 billion aggregate principal amount of short-term notes to finance short-term liabilities. Any such issuance will mature within 364 days from date of issue. There was no commercial paper outstanding at December 31, 2025.
Cash, cash equivalents and marketable securities
As of December 31, 2025, Solventum had $878 million of cash and cash equivalents, of which approximately $800 million was held by the Company's foreign subsidiaries and approximately $78 million was held in the United States. These balances are invested in bank instruments and other high-quality fixed income securities. There was an immaterial amount of marketable securities at December 31, 2025.
Cash Flows
Cash flows from operating, investing and financing activities are provided in the table that follows. Individual amounts in the consolidated statements of cash flows exclude the effect of exchange rate impacts on cash and cash equivalents, which are presented separately in the cash flows. Thus, the amounts presented in the following operating, investing and financing activities tables reflect changes in balances from period to period adjusted for these effects.
| Year Ended December 31, | ||||||||||||||||||||
| (Millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 369 | $ | 1,185 | $ | 1,915 | ||||||||||||||
| Investing activities | 2,797 | (380) | (230) | |||||||||||||||||
| Financing activities | (3,057) | (240) | (1,552) | |||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 7 | 3 | - | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 116 | $ | 568 | $ | 133 | ||||||||||||||
Operating Activities
In 2025, cash flows provided by operating activities decreased compared to 2024 primarily due to lower net income, excluding the gain on sale of the Purification and Filtration business, driven by higher costs to separate from 3M as well as higher transaction related activity including costs incurred in connection with closing the Purification and Filtration divestiture and higher receivables and other assets required to support the related transition service agreements.
In 2024, cash flows provided by operating activities decreased compared to 2023 primarily due to lower net income. Cash flow activity with 3M is reflected in the due from and due to related parties. This activity includes settlement of payables and receivables transferred at Spin-Off related to operating transactions between 3M and Solventum entities that occurred prior to the Spin-Off and transactions under the transition agreements with 3M.
Investing Activities
The increase in investing activities is related to proceeds from sale of the Purification and Filtration business in September 2025, partially offset by the payment to acquire Acera in December 2025. Purchases of property, plant and equipment remained flat in 2025 as compared to 2024. The company continues to focus capital spending on separation related activities as the Company relocates manufacturing and source of supply from 3M.
Purchases of property, plant and equipment increased in 2024 as compared to 2023. The increase is primarily driven by additional separation related capital spending as the Company relocates manufacturing and source of supply from 3M.
Financing Activities
Financing cash outflows increased in 2025 primarily due to the Company's repayment of $2.0 billion of senior notes via tender offers, including extinguishment costs, upon completion of the sale of the Purification and Filtration business and $870 million repayment of outstanding principal issued under the three year senior unsecured term loan credit facility. In addition, the Company repaid the remaining $200 million aggregate principal amount outstanding under the eighteen month senior unsecured term loan credit facility.
2024 proceeds from long-term debt of $8.3 billion were related to the first quarter issuance of $6.9 billion in senior notes and $1.5 billion in senior term loan credit facilities. The proceeds from these financing transactions were transferred to 3M in connection with the Spin-Off transaction, other than the amounts retained in order to achieve the $600 million retained cash target. During 2024, the Company repaid $300 million outstanding principal issued under the senior term loan credit facilities.
Material Cash Requirements from Known Contractual and Other Obligations:
Solventum's material cash requirements from known contractual and other obligations primarily relate to the following, for which information on both a short-term and long-term basis is provided in the indicated notes to the consolidated financial statements:
•Tax obligations-Refer to Note 8 to the consolidated financial statements.
•Debt-Refer to Note 9 to the consolidated financial statements.
•Commitments and contingencies-Refer to Note 12 to the consolidated financial statements.
•Operating leases-Refer to Note 13 to the consolidated financial statements.
Solventum purchases the majority of its materials and services as needed, with no unconditional commitments. In limited circumstances, in the normal course of business, the Company enters into unconditional purchase obligations with various vendors that may take the form of, for example, take or pay contracts in which the Company guarantees payment to ensure availability of certain materials or services or to ensure ongoing efforts on capital projects. Additionally, the Company enters into contractual obligations for cloud storage solutions, enterprise resource planning and other IT-related services. The Company expects to receive underlying materials or services for these purchase obligations. To the extent these purchase obligations fluctuate, it largely trends with normal-course changes in regular operating activities. Additionally, contractual capital commitments represent a small part of the Company's expected capital spending. As of December 31, 2025, unconditional purchase obligations aggregated to approximately $330 million over the next five years, primarily comprised of IT-related obligations.
Financial Instruments
The Company enters into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances. As circumstances warrant, the Company also uses cross currency swaps as hedging instruments to hedge portions of the Company's net investments in foreign operations. To help manage borrowing costs, the Company may enter into interest rate swaps, interest rate locks or other hedging instruments.
Refer to Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," for further discussion of foreign exchange rates risk, and interest rates risk and commodity prices risk.
Solventum Corporation published this content on February 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 27, 2026 at 18:42 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]