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Solventum SOLV reported first-quarter 2025 adjusted earnings per share (EPS) of $1.34, which beat the Zacks Consensus Estimate of $1.19 by 12.6%. The bottom line declined 35.6% year over year.
GAAP EPS in the quarter was 78 cents, down 43.1% from the year-ago quarter’s level. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)
The company reported revenues of $2.07 billion, up 2.6% reportedly from the prior-year recorded number. Organically, sales were up 4.3%. The metric beat the Zacks Consensus Estimate by 3.4%. Organic sales growth was primarily driven by positive performance from all segments, primarily MedSurg and HIS.
Shares of the company were up 1.4% during after-hours trading on May 9, following a strong quarterly performance. The stock has risen 20.8% since its IPO on April 1, 2024, against the industry’s decline of 17.3%. The S&P 500 Index has gained 17.8% in the same period.
MedSurg
Revenues from this segment totaled $1.16 billion, up 3.4% reportedly and 8.2% organically year over year. Organic growth was driven by strong volumes in IV site management and hospital consumables. Sales also benefited from the adoption of single-use negative pressure wound therapy.
Dental Solutions
Revenues totaled $328 million, down 2.1% year over year reportedly but up 0.4% organically. Weak performance of Core Orthodontics amid market-driven headwinds was offset by strong sales of Restorative, including benefits of recent product launches — Filtek Easy Match and ClinPro Clear.
HIS
Revenues from this segment amounted to $329 million, up 3.6% reportedly and 3.9% organically on a year-over-year basis. Organic growth was driven by the continued adoption of 360 Encompass revenue cycle management.
Purification and Filtration
Revenues from this segment amounted to $242 million, down 0.9% year over year reportedly but up 2.2% organically. Growth was driven by continued strength in bioprocessing filtration and industrial filtration, offsetting declines in Membrane OEM.
Adjusted gross profit was $1.15 billion, down 1.9% year over year. As a percentage of revenues, the adjusted gross margin was 55.6%, down approximately 260 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $769 million, up 29% year over year.
Research and development expenses totaled $193 million, down 1% on a year-over-year basis.
Adjusted operating income totaled $407 million, down 15.9% year over year. As a percentage of revenues, the adjusted operating margin was 19.7%, down approximately 430 bps from the prior-year quarter’s figure.
Solventum exited the first quarter with cash, cash equivalents and investments of $534 million compared with $762 million in the previous quarter.
Total assets increased to $14.52 billion from $14.46 billion in the previous quarter.
Solventum raised its sales guidance for 2025. Solventum now expects organic sales growth of 1.5-2.5% (2-3% excluding ~50bps of SKU Exit impact), up from the previous guidance of 1-2%. The Zacks Consensus Estimate for the same is pegged at $8.25 billion.
SOLV continues to expect adjusted EPS in the band of $5.45-$5.65. The Zacks Consensus Estimate for earnings is pinned at $5.48 per share.
Solventum Corporation price-consensus-eps-surprise-chart | Solventum Corporation Quote
Solventum exited the first quarter on a strong note. Both the top and bottom lines beat their respective estimates. The organic growth at SOLV’s largest segment (in terms of revenues), MedSurg, looks promising. The trend is likely to continue in the upcoming quarters as well due to continued demand for its products. Strong adoption of 360 Encompass revenue cycle management is likely to aid sales growth for the HIS segment in the future.
However, a year-over-year decline in adjusted EPS does not bode well. The contraction in gross and operating margins also raises concern.
SOLV is undergoing a three-phase restructuring program after its separation from 3M in 2023. Phase 1 is expected to be completed within 12-24 months, focusing on debt reduction, portfolio optimization and operational efficiency. These initiatives look promising for the company’s long-term prospects.
Solventum currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the same medical industry are AxoGen AXGN, Cardinal Health CAH and CVS Health CVS.
AxoGen, carrying a Zacks Rank #2 at present, has an estimated growth rate of 76.9% for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AXGN’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 113.33%. AXGN’s shares have declined 23.6% so far this year.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 11.8% for fiscal 2026. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 10.30%. CAH’s shares have gained 24.5% so far this year.
CVS Health, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 11.4% for 2025. The company’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 18.08%. CVS’ shares have gained 51.2% so far this year.
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This article originally published on Zacks Investment Research (zacks.com).
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