Solventum Corp
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
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Overview
Our Business
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 four business segments: MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.
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. Other, as comprised in the tables below, includes acquisition and divestiture-related activities. Acquisitions include 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 dental anesthetics business that was sold in August 2023 as well as lost sales of certain health care businesses retained by 3M India in connection with the Spin-Off. Solventum believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.
Sales and operating income by business segment:
The following tables contain sales and operating results by business segment for all periods presented. The Company’s use of the term “NM” reflects results considered not material due to not having material activity in comparable prior years. Refer to the section entitled“—Performance by Business Segment” below for discussion of sales change and operating performance. Refer to Note 15 to the condensed consolidated and combined financial statements for additional information on business segments.
Segment and Total Company Net Sales
| Three months ended September 30, · Increase/(Decrease) | ||||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Total | Currency Impact | Other | Organic |
| Segment Sales | ||||||
| MedSurg | $1,182 | $1,180 | 0.1% | (0.1)% | (0.7)% | 1.0% |
| Dental Solutions | 313 | 331 | (5.2) | — | (1.2) | (3.9) |
| Health Information Systems | 326 | 321 | 1.5 | 0.1 | — | 1.5 |
| Purification and Filtration | 238 | 242 | (1.5) | — | (1.1) | (0.3) |
| Corporate and Unallocated | 23 | — | NM | NM | NM | NM |
| Total Company | $2,082 | $2,074 | 0.4% | (0.1)% | 0.2% | 0.3% |
| Nine months ended September 30, · Increase/(Decrease) | ||||||
| (Dollars in millions) | 2024 | 2023 | Total | Currency Impact | Other | Organic |
| Segment Sales | ||||||
| MedSurg | $3,463 | $3,464 | —% | (0.6)% | (0.5)% | 1.1% |
| Dental Solutions | 979 | 1,023 | (4.3) | (0.6) | (1.9) | (1.8) |
| Health Information Systems | 971 | 953 | 1.8 | — | — | 1.8 |
| Purification and Filtration | 721 | 721 | 0.1 | (0.7) | (0.9) | 1.7 |
| Corporate and Unallocated | 45 | — | NM | NM | NM | NM |
| Total Company | $6,179 | $6,161 | 0.3% | (0.5)% | —% | 0.8% |
Segment and Total Company Operating Income
| Three months ended September 30, | |||
|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | 2024 vs 2023 change |
| Segment Operating Income | |||
| MedSurg | $243 | $307 | (20.8)% |
| Dental Solutions | 72 | 114 | (36.8) |
| Health Information Systems | 105 | 114 | (7.9) |
| Purification and Filtration | 20 | 48 | (58.3) |
| Corporate and Unallocated | (165) | (79) | 108.9 |
| Total Company | $275 | $504 | (45.4)% |
| Nine months ended September 30, | |||
| (Dollars in millions) | 2024 | 2023 | 2024 vs 2023 change |
| Segment Operating Income | |||
| MedSurg | $678 | $829 | (18.2)% |
| Dental Solutions | 272 | 349 | (22.1) |
| Health Information Systems | 317 | 304 | 4.3 |
| Purification and Filtration | 78 | 134 | (41.8) |
| Corporate and Unallocated | (445) | (330) | 34.8 |
| Total Company | $900 | $1,286 | (30.0)% |
Net Sales by Geographic Area
Percent change information compares the three and nine months ended September 30, 2024 with the same period for the prior year, unless otherwise indicated.
| United States | International | Worldwide | |
|---|---|---|---|
| Net sales (millions) | $1,217 | $865 | $2,082 |
| % of worldwide sales | 58.5% | 41.5% | 100.0% |
| Increase/(decrease) | |||
| Total | 4.1% | (4.5)% | 0.4% |
| Currency impact | — | (0.1) | (0.1) |
| Other | 1.9 | (1.9) | 0.2 |
| Organic | 2.2% | (2.5)% | 0.3% |
| United States | International | Worldwide | |
| Net sales (millions) | $3,532 | $2,647 | $6,179 |
| % of worldwide sales | 57.2% | 42.8% | 100.0% |
| Increase/(decrease) | |||
| Total | 3.4% | (3.6)% | 0.3% |
| Currency impact | — | (1.2) | (0.5) |
| Other | 1.4 | (1.8) | — |
| Organic | 2.0% | (0.6)% | 0.8% |
Additional information beyond what is included in the preceding table is as follows:
Third quarter 2024 results
In the United States both total sales and organic sales increased. Organic growth was led by MedSurg and Health Information Systems.
In International, both total sales and organic sales decreased. Organic growth decline was led by MedSurg and Dental Solutions.
First nine months 2024 results
In the United States both total sales and organic sales increased. Organic growth was led by MedSurg and Health Information Systems.
In International, both total sales and organic sales decreased. Foreign currency translation negatively impacted total growth. Organic growth decline was led by MedSurg, partially offset by growth in Purification and Filtration.
Managing currency risks
Prior to April 1, 2024, Solventum indirectly participated in 3M’s centrally managed hedging program, which utilizes a number of tools to manage currency risk including natural hedges such as pricing, productivity, hard currency, hard currency-indexed billings, and localizing source of supply. 3M also used financial hedges to mitigate currency risk. Starting in the second quarter of 2024, Solventum established its own hedging program. Refer to Note 10 for additional details.
The stronger U.S. dollar had an immaterial worldwide impact on sales for the third quarter of 2024 compared to the same period last year. The stronger U.S. dollar had a negative worldwide impact on sales of less than 1 percent in the first nine months of 2024 compared to the first nine months of 2023. Net of the Company’s hedging strategy, foreign currency negatively impacted earnings for the third quarter and first nine months of 2024 compared to the same periods last year.
Financial condition
Refer to the section entitled“—Financial Condition and Liquidity” below for a discussion of items impacting cash flows.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.