Solventum (NYSE: SOLV) beat Wall Street estimates for fourth-quarter earnings in the company’s first year following its 2024 spin-off from 3M.
Solventum CFO Wayde McMillan attributed the “stronger-than-expected” sales growth to its MedSurg and Dental Solutions businesses.
MedSurg sales increased 5% from Q4 2024 to $1.24 billion in Q4 2025. Dental Solutions reported $343 million in Q4 sales, a 6% increase from the previous year on an organic basis.
Non-GAAP diluted earnings per share (EPS) for the fourth-quarter came in at $1.57, exceeding expectations of $1.50.
“Solventum’s fourth quarter results reflect another quarter of solid performance resulting in full year 2025 results ahead of our expectations for sales and EPS,” Solventum CEO Bryan Hanson said in a news release.
For the full year, Solventum reported an increase of 3% in organic sales growth and a non-GAAP diluted EPS of $6.11, both ahead of expectations.
Free cash flow was negative $10 million, but the company expected positive cash flow in the range of $150 million to $250 million. McMillan blamed higher Q4 costs in supporting portfolio moves and ERP cutovers.
“Excluding these [portfolio moves and ERP], we were in line with our expectations,” McMillan said on the company’s earnings call. “When adjusting for the purification and filtration divestiture and separation costs during 2025, free cash flow would have been approximately $1 billion for the year.”
McMillan said Solventum’s increased organic sales growth puts the company on an accelerated path toward its long-term sales growth target.
For its 2026 guidance, Solventum forecasts a 2% to 3% organic sales growth range, excluding contribution from its recent acquisition of Acera Surgical in December 2025. McMillan expects that purchase to “contribute meaningfully” to Solventum’s future reported growth.
For 2026 EPS, Solventum guides a range of $6.40 to $6.60 and expects approximately $200 million in free cash flow. The company said it would expect free cash flow closer to $1 billion excluding the continuing impact of costs to separate from 3M, payments due to 3M and costs to support the divestiture of its purification and filtration business in Sept 2025.
McMillan said separation costs will reduce in 2027 when the split from 3M is completed.
Despite tariff uncertainties, Solventum plans to expand operating margins by 50 to 100 basis points in 2026 by accelerating sales and driving gross margins over time by improving efficiency with its multi-year “Transform for the Future” initiative.
Solventum announced the initiative in 2025, saying it’s meant to accelerate the company’s long-term growth strategy by reshaping cost structure and enhancing operational efficiency. Once fully implemented, Solventum anticipates approximately $500 million in annual cost savings.
The initiative is intended to support margin expansion and opportunities to “meaningfully invest for growth” while also targeting cost structure, Hanson said on today’s earnings call. Solventum will be looking at streamlining systems and increasing automation, he said.
The company is still developing the program, according to Hanson, but he said its benefits might be seen as early as this year.
“It’s a multi-year program, but I would say generally we will start to benefit from the program in 2026,” Hanson said. “But the majority of the benefits will be in 2027 and beyond. It just takes time to put the programs together and then execute on them.”
Hanson said new Solventum Chief Commercial Officer Heather Knight will help the company execute its 2026 strategy, overseeing global commercial and R&D operations across its MedSurg, Dental Solutions and Health Information Systems businesses.
“We brought Heather in to be the primary leader of our businesses,” Hanson said. “She’s a very strong operator. … We’ve got a great operator now looking at the synergies across our business.”
