3M health care spinoff Solventum prioritizing paying down $8.3B long-term debt

Solventum, the spinoff of 3M's health care business, is starting out as Minnesota's newest public company with a heavy debt load and stagnant sales.

The Maplewood-based company has $8.3 billion in long-term debt and is projecting slightly negative to no revenue growth for its first full year of existence. Solventum reported first-quarter results Thursday despite only officially detaching from 3M on April 1. In contrast to 3M's earnings report last week, Solventum provided more specificity and details about its business.

The numbers did show some positives, including overall sales of $2 billion, which grew 0.2%. But sales in its largest medical/surgical division were down 0.4%. Revenue in its purification and filtration business, though, was up 6.1%.

"I think Solventum looks like it has quite a bit of upside. It's a pretty strong cash-flowing business," said Joshua Aguilar, a 3M analyst with Chicago-based Morningstar.

Looking ahead, the company stated "Solventum intends 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."

Solventum's stock closed Thursday down 2.4% at $64.83.

Analyst Matt Arnold with St. Louis-based Edward Jones outlined some of Solventum's challenges in an initial research report last month. Arnold noted the company is carrying an "above-average debt burden" and its revenue growth has "lagged peers." He also projected Solventum could cut some products from its portfolio that are "slower growing or less profitable."

"Repaying the debt quickly is a priority for the company," Arnold wrote in his report. "But it will likely delay the company's ability to return capital to shareholders and pursue acquisition opportunities, in our opinion."

Solventum is not making CEO Bryan Hanson available for comment.

3M shareholders received 80.1% of Solventum stock in the spinoff. 3M retained 19.9% of the shares but plans to sell those holdings within five years.