3M
(NYSE: MMM)
expects to complete the spinoff of its healthcare business during the first half of 2024.
During 3M’s Q3 earnings call today, CEO Mike Roman said the spinoff is progressing. He mentioned the previous news of leadership hires for the new stand-alone company, including former Zimmer Biomet CEO Bryan Hanson as CEO and former Humacyte CEO Carrie Cox as board chair. The new CFO will be former Insulet CFO Wayde McMillan.
“The team continues to make very good progress. We don’t see any hurdles ahead of us. There’s a lot of work to do to get ready for the spin,” Roman said.
3M President and CFO Monish Patolawala added: “The teams are working through system changes, standing up legal entities and the regulatory filings we need to do. That’s what everyone is focused on from the healthcare side.”
Meanwhile, 3M Health Care saw $2.1 billion in sales, with 2.4% organic growth, during the third quarter of 2023. It saw low-single-digit organic sales increases in medical products and services and high-single-digit increases in oral care. Biopharma demand has normalized post-COVID, while tighter hospital budgets negatively impacted health information systems performance.
“As procedure volumes continue to improve and hospital budgets stabilize, we are confident in the long-term outlook of this business,” Patolawala said.
Productivity actions, restructuring, and strong spending discipline helped boost the healthcare business’ operating margin by 50 basis points year-0ver-year, to 22.2%.
3M continues to overhaul its operations
Overall, 3M’s leadership said previously announced restructuring initiatives, including layoffs, were moving forward.
“We are progressing with our restructuring actions to streamline our organization, reduce structural costs and get us closer to customers,” Roman said. “We have leaned out the center of our company, simplified our global supply chain organization, and optimized our global go-to-market models.”
In recent months, 3M announced a six-year $6 billion settlement to resolve hundreds of thousands of veterans lawsuits over faulty earplugs. It came on top of a proposed 13-year, $10.3 billion settlement with public water systems across the U.S. for testing and cleanup related to so-called “forever chemicals.”
Charges related to the legal settlements resulted in 3M recording a loss of nearly $2.7 billion, or $3.74 per share, off of $8.3 billion in sales for the quarter ended Sept. 30, 2023. The company earned nearly $4.2 billion, or $6.77 per share, off of $8.6 million in sales during Q3 2022.
Adjusted to exclude one-time items, 3M saw EPS of $2.17. The result was 18¢ ahead of The Street, where analysts expected EPS of $2.35 and sales of $8.03 billion.
3M boosted its full-year adjusted EPS expectations to $8.60–9.10, up from $8.50–$9.00. It expects sales to be down 1–5%.
Investors reacted by sending MMM shares up more than 5% to $90.45 by midday training today. MassDevice‘s MedTech 100 Index was up slightly.
