Solventum Stock Down Despite Q4 Earnings & Revenues Beat, Margins Down

Solventum SOLV reported fourth-quarter 2025 adjusted earnings per share (EPS) of $1.57, which beat the Zacks Consensus Estimate of $1.50 by 4.7%. The bottom line improved 11.3% year over year.

GAAP EPS in the quarter was 36 cents compared with 17 cents in the year-ago quarter.

Revenue Details

The company reported revenues of $1.99 billion, up 3.7% reportedly from the prior-year recorded number. Organically, sales were up 3.5%. The metric beat the Zacks Consensus Estimate by 1.6%. Organic sales growth was driven by positive performance from all segments, primarily driven by results of the Infection Prevention and Surgical Solutions business within MedSurg as well as Dental Solutions.

However, shares of the company were down 2.5% during after-hours trading on Feb. 26.

Segmental Details

MedSurg

Revenues from this segment totaled $1.24 billion, up 5.2% reportedly and up 3.2% organically year over year. The sales growth was driven by double-digit growth of NPWT with single-use Prevena therapy and continued expansion of V.A.C. Peel and Place Dressings, though gains were partially offset by SKU exits and backorder headwinds in Advanced Wound Dressings. Meanwhile, IP&SS benefited from solid demand and increased adoption of the Tegaderm IV site management portfolio, along with momentum from recent Attest sterilization product launches.

Dental Solutions

Revenues totaled $343 million, up 8.6% year over year reportedly and up 5.9% organically. Growth was driven primarily by the core restoratives segment, supported by strong performance of existing brands, recent launches such as ClinPro Clear Fluoride Treatment and Filtek Easy Match, and sales force specialization, alongside continued progress in reducing customer backorders.

 Health Information Systems (HIS)

Revenues from this segment amounted to $348 million, up 3.7% reportedly and 3.2% organically on a year-over-year basis. Growth was driven by Expanded adoption of 360 Encompass revenue cycle management and ongoing international expansion.

Solventum Corporation Price, Consensus and EPS Surprise

Solventum Corporation price-consensus-eps-surprise-chart | Solventum Corporation Quote

Margins

Adjusted gross profit was $1.07 billion, down 8.3% year over year. As a percentage of revenues, the adjusted gross margin was 53.5%, down approximately 270 bps from the prior-year quarter’s figure.

Selling, general and administrative expenses totaled $759 million, down 3.2% year over year.

Research and development expenses totaled $175 million, down 12.1% on a year-over-year basis. Adjusted operating expenses totaled $672 million, down 9.8% year over year.

Adjusted operating income totaled $397 million, down 5.9% year over year. As a percentage of revenues, the adjusted operating margin was 19.9%, down approximately 50 bps from the prior-year quarter’s figure.

Financial Position

Solventum exited the fourth quarter with cash, cash equivalents and investments of $8.78 million compared with $1.64 billion in the previous quarter.

Total assets increased to $14.29 billion from $13.97 billion in the previous quarter.

Cumulative net cash provided by operating activities during the fourth quarter was $369 million compared with $1.19 billion in the year-ago period.

2026 Guidance

Solventum provided its guidance for 2026. The company now expects organic sales growth at the higher end of 2-3% (3-4% excluding 100bps of SKU Exit impact). The Zacks Consensus Estimate is pegged at $8.05 billion.

SOLV expects adjusted EPS to be in the band of $6.40-$6.60. The Zacks Consensus Estimate for earnings is pinned at $6.36 per share.

Our Take

Solventum exited the fourth quarter on a strong note, wherein earnings and sales beat the Zacks Consensus Estimate. Solid execution across MedSurg, Dental Solutions, and Health Information Systems, combined with a steady pipeline of product innovation, continues to lift organic growth and expand market share. Commercial restructuring is proving effective, with specialization, accountability metrics, and leadership changes translating into faster decision-making and stronger conversion across growth platforms like negative pressure wound therapy, antimicrobial IV site management, and restorative dental products.

Solventum completed its first acquisition of Acera Surgical, expanding its MedSurg portfolio into the fast-growing regenerative tissue matrices segment within acute care, while reaffirming tuck-in M&A as a strategic priority. It also launched a multi-year “Transform for the Future” initiative aimed at delivering approximately $500 million in annual cost savings, with an estimated cumulative pretax cost of around $500 million. The successful sale of the Purification and Filtration business materially strengthened the balance sheet, reduced debt, and expanded flexibility for tuck-in M&A or potential capital returns.

Progress on separation from 3M is ahead of plan, with ERP transitions and manufacturing consolidation supporting improved service levels and enhanced operational control. With raised guidance, consistent volume-driven performance, and tangible progress toward long-range revenues and margin targets, Solventum enters 2026 well-positioned to accelerate profitable growth and expand value creation for shareholders, customers, and patients.

SOLV’s Zacks Rank and Key Picks

Solventum currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. CAH, GE HealthCare Technologies Inc. GEHC and McKesson Corporation MCK.

Cardinal Health, carrying a Zacks Rank of 2 (Buy), reported second-quarter fiscal 2026 adjusted earnings per share (EPS) of $2.63, beating the Zacks Consensus Estimate by 9.9%. Revenues of $65.63 billion outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health has a long-term estimated growth rate of 15%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.3%.

GE HealthCare reported fourth-quarter 2025 adjusted EPS of $1.44, beating the Zacks Consensus Estimate by 1%. Revenues of $5.69 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.

GE HealthCare has a long-term estimated growth rate of 9.1%. GEHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.5%.

McKesson reported third-quarter fiscal 2026 adjusted EPS of $9.34, beating the Zacks Consensus Estimate by 0.4%. Revenues of $106.16 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently caries a Zacks Rank #2.

McKesson has a long-term estimated growth rate of 15.9%. MCK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.6%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research