Solventum, a new public company spun off from 3M’s healthcare business, is facing challenges as it begins its journey in Minnesota. With $8.3 billion in long-term debt and projected negative to no revenue growth for its first year of existence, the Maplewood-based company has a heavy load to bear. Despite officially detaching from 3M on April 1, Solventum provided more specificity and details about its business in its first-quarter results report on Thursday.
While sales were down in the medical/surgical division, revenue in the purification and filtration business was up by 6.1%. Analyst Joshua Aguilar with Chicago-based Morningstar sees potential for growth in Solventum, calling it a strong cash-flowing business with quite a bit of upside. However, analyst Matt Arnold with St. Louis-based Edward Jones noted some challenges for the company, including an above-average debt burden and lagging revenue growth that has slowed down peer companies.
Looking ahead, Solventum plans to prioritize debt paydown for approximately the next 24 months and has decided not to pay a cash dividend on its common stock or authorize the repurchase of shares at this time. In an initial research report last month, Arnold outlined some potential solutions for Solventum’s problems, including cutting slower growing or less profitable products from its portfolio.
Solventum’s CEO Bryan Hanson is not available for comment at this time. Meanwhile, 3M shareholders received 80.1% of Solventum stock in the spinoff while retaining 19.9% of the shares but plans to sell those holdings within five years.
