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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-08 · 160 added, 271 removed, 150 unchanged (74% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s unaudited condensed consolidated and combined financial statements and corresponding notes elsewhere in this Quarterly Report on Form 10-Q.

The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Solventum Corporation ( “ Solventum, ” or the “ Company ” ) for the nine months ended September 30, 2024 and 2023.

For a full understanding of our financial condition and results of operations, the below discussion should be read alongside the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Registration Statement on Form 10 as filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2024, which became effective on March 13, 2024 (the “Information Statement”).

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s condensed consolidated financial statements and corresponding notes elsewhere in this Quarterly Report on Form 10-Q.

The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Solventum for the three months ended March 31, 2025 and 2024.

For full understanding of the Company's financial condition and results of operations, the below discussion should be read alongside the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's 2024 Annual Report on Form 10-K.

This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances.

Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors.” Actual results may differ materially from these expectations.

See “ Cautionary Note Regarding Forward-Looking Statements.

Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, and particularly in Item 1A, “Risk Factors” in the Company's 2024 Annual Report on Form 10-K.

All amounts discussed are in millions of U.S.

dollars, unless otherwise indicated.

Certain columns and rows within tables may not add up due to the use of rounded numbers.

Unless the context otherwise requires, references to “Solventum” and the “Company” refer to (i) 3M’s Health Care Business prior to the Spin-Off as a carve-out business of 3M with related condensed combined financial statements and (ii) Solventum Corporation and its subsidiaries following the Spin-Off with related condensed consolidated and combined financial statements.

Amounts reported within this interim report are rounded to the nearest million and the sum of the components may not equal the total amount reported due to rounding.

Additionally, certain columns and rows within tables may not sum due to rounding.

Unless the context otherwise requires, references to “Solventum” and the “Company” refer to (i) 3M’s Health Care Business prior to the Spin-Off as a carve-out business of 3M and (ii) Solventum Corporation and its subsidiaries following the Spin-Off.

Transition to Standalone Company

Solventum utilized allocations and carve-out methodologies through the date of the Spin-Off to prepare historical combined financial statements and condensed combined financial statements.

The condensed combined financial statements herein for periods prior to the Spin-Off may not be indicative of the Company’s future performance, do not necessarily include the actual expenses that would have been incurred by Solventum, and may not reflect our results of operations, financial position, and cash flows had we been a separate, standalone company during the historical periods presented.

In particular, Solventum benefited from 3M’s long operating history, reputation and well-known brand.

Following the separation, Solventum is operating under its own brand, and accordingly may be negatively impacted due to the loss of benefits conferred by 3M’s brand recognition and reputation.

In addition, the debt obligations incurred by Solventum in connection with the separation will adversely affect its profitability and could affect its ability to use its cash flow for investing in the business, strategic transactions, including mergers and acquisitions, and returning capital.

See Note 1, “ Organization and Basis of Presentation ” to the condensed consolidated and combined financial statements and Item II, Part 1A “Risk Factors” for additional information.

Solventum utilized allocations and carve-out methodologies through the date of the Spin-Off to prepare combined financial statements.

The condensed consolidated financial statements herein for periods prior to the Spin-Off may not be indicative of the Company’s future performance, do not necessarily include the actual expenses that would have been incurred, and may not reflect our results of operations, financial position, and cash flows had we been a separate, standalone company during the historical periods presented.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of Solventum’s financial statements with a narrative from the perspective of management.

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MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.

References are made to organic sales change, which is defined as the change in net sales, absent the separate impacts on sales from foreign currency translation and acquisitions, net of divestitures.

On February 25, 2025, the Company entered into a definitive agreement to sell its Purification and Filtration business to Thermo Fisher Scientific Inc.

for $4.1 billion.

The closing of the transaction is expected to be completed by the end of the 2025 calendar year, subject to regulatory approvals and customary closing conditions.

References are made to organic sales change, which is defined as the change in net sales, absent the separate impacts on sales from foreign currency translation and acquisitions, net of divestitures, and to constant currency change, which is defined as the change in net sales absent the impact on sales from foreign currency translation.

Other, as comprised in the tables below, includes acquisition and divestiture-related activities.

Acquisitions include non-health care related supply agreements that conveyed from 3M to the Company at Spin-Off and sales from new supply agreements with 3M that commenced at Spin-Off.

Divestiture impacts include lost sales from the Company’s dental anesthetics business that was sold in August 2023 as well as lost sales of certain health care businesses retained by 3M India in connection with the Spin-Off.

Solventum believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.

Divestiture impacts include lost sales from the Company’s dental anesthetics business that was sold in August 2023 as well as lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.

Solventum believes this

information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.

Sales and operating income by business segment:

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Refer to the section entitled “ —Performance by Business Segment ” below for discussion of sales change and operating performance.

Refer to Note 15 to the condensed consolidated and combined financial statements for additional information on business segments.

Refer to Note 17 to the condensed consolidated financial statements for additional information on business segments.

Segment and Total Company Net Sales

Three months ended September 30, Increase/(Decrease)

(Dollars in millions) 2024 2023 Total

Currency Impact

Other Organic

Segment Sales

MedSurg $ 1,182 $ 1,180 0.1 % (0.1) % (0.7) % 1.0 %

Dental Solutions 313 331 (5.2) — (1.2) (3.9)

Health Information Systems 326 321 1.5 0.1 — 1.5

Purification and Filtration 238 242 (1.5) — (1.1) (0.3)

Corporate and Unallocated 23 — NM NM NM NM

Total Company $ 2,082 $ 2,074 0.4 % (0.1) % 0.2% 0.3 %

Nine months ended September 30, Increase/(Decrease)

(Dollars in millions) 2024 2023 Total

Currency Impact

Other Organic

Three months ended March 31, Increase/(Decrease)

(Millions) 2025 2024 Reported Growth Currency Impact Constant Currency Other Organic Growth

Segment Sales

Advanced Wound Care $ 448 $ 441 1.5 % (1.2) % 2.7 % (0.2) % 2.8 %

Infection Prevention and Surgical Solutions 710 678 4.7 (2.0) 6.7 (1.5) 8.2

MedSurg 1,157 1,119 3.4 (1.6) 5.0 (1.0) 6.0

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Purification and Filtration 242 245 (0.9) (2.0) 1.1 (1.1) 2.2

Corporate and Unallocated 45 — NM NM NM NM

Corporate and Unallocated 13 — NM NM NM NM NM

Total Company $ 2,070 $ 2,016 2.6 % (1.6) % 4.2 % (0.1) % 4.3 %

Segment and Total Company Operating Income

Three months ended September 30,

(Dollars in millions) 2024 2023 2024 vs 2023 change

Segment Operating Income

MedSurg $ 243 $ 307 (20.8) %

Dental Solutions 72 114 (36.8)

Health Information Systems 105 114 (7.9)

Purification and Filtration 20 48 (58.3)

Corporate and Unallocated (165) (79) 108.9

Total Company $ 275 $ 504 (45.4) %

Nine months ended September 30,

(Dollars in millions) 2024 2023 2024 vs 2023 change

Three months ended March 31,

(Millions) 2025 2024 2025 vs 2024 change

Segment Operating Income

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Net Sales by Geographic Area

Percent change information compares the three and nine months ended September 30, 2024 with the same period for the prior year, unless otherwise indicated.

Three months ended September 30, 2024

United States International Worldwide

Net sales (millions) $ 1,217 $ 865 $ 2,082

While the Company manages its businesses globally and believes its business segment results are the most relevant measure of performance, the Company also utilizes geographic area data as a secondary performance measure.

Sales are generally reported within the geographic area based on the location of the customer taking possession of the products or in which services are rendered.

Percent change information compares the three months ended March 31, 2025 with the same period for the prior year, unless otherwise indicated.

Three months ended March 31, 2025

(Millions) United States International Worldwide

Net sales $ 1,140 $ 930 $ 2,070

% of worldwide sales 55.1 % 44.9 % 100.0 %

Increase/(decrease)

4.1 % (4.5) % 0.4 %

Currency impact

— (0.1) (0.1)

Organic growth 4.0 % 4.6 % 4.3 %

Other 0.8 (1.1) (0.1)

2.2 % (2.5) % 0.3 %

Nine months ended September 30, 2024

United States International Worldwide

Net sales (millions) $ 3,532 $ 2,647 $ 6,179

% of worldwide sales 57.2 % 42.8 % 100.0 %

Increase/(decrease)

3.4 % (3.6) % 0.3 %

Constant currency 4.8 3.5 4.2

Currency impact — (3.4) (1.6)

— (1.2) (0.5)

Other 1.4 (1.8) —

2.0 % (0.6) % 0.8 %

Reported growth 4.8 % 0.1 % 2.6 %

Additional information beyond what is included in the preceding table is as follows:

Third quarter 2024 results

• In the United States both total sales and organic sales increased.

Organic growth was led by MedSurg and Health Information Systems.

• In International, both total sales and organic sales decreased.

Organic growth decline was led by MedSurg and Dental Solutions.

First nine months 2024 results

• In the United States both total sales and organic sales increased.

Organic growth was led by MedSurg and Health Information Systems.

• In International, both total sales and organic sales decreased.

Foreign currency translation negatively impacted total growth.

Organic growth decline was led by MedSurg, partially offset by growth in Purification and Filtration.

First quarter 2025 results

• In the United States geographic area, both total sales and organic sales increased.

Organic growth occurred across all segments, led by MedSurg.

• In the International geographic area, total sales were flat while organic sales increased.

Organic growth was led by MedSurg.

Managing currency risks

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Starting in the second quarter of 2024, Solventum established its own hedging program.

Refer to Note 10 for additional details.

The stronger U.S.

dollar had an immaterial worldwide impact on sales for the third quarter of 2024 compared to the same period last year.

Refer to Note 11 to the condensed consolidated financial statements for additional details.

The stronger U.S.

dollar had a negative worldwide impact on sales of less than 1 percent in the first nine months of 2024 compared to the first nine months of 2023.

Net of the Company’s hedging strategy, foreign currency negatively impacted earnings for the third quarter and first nine months of 2024 compared to the same periods last year.

dollar had a negative worldwide impact on sales for the three months ended March 31, 2025 compared to 2024.

Solventum estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $2 million at March 31, 2025.

Financial condition

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Operating Expenses

Three months ended September 30, Nine months ended September 30,

(Percent of corresponding net sales) 2024 2023 Change 2024 2023 Change

Three months ended March 31,

(Percent of corresponding net sales) 2025 2024 Change

Cost of product 52.3 % 46.7 % 5.6 %

Cost of software and rentals 25.6 25.7 (0.1)

Costs of Product

Costs of product includes manufacturing, engineering and freight costs.

Costs of product, measured as a percent of sales of product, increased in the third quarter of 2024 when compared to the third quarter of 2023.

The increase was driven by increased costs due to the impact of higher costs on inventory sourced under the master supply and transition manufacturing agreements with 3M and due to the cost of other transition support provided by 3M.

Costs of product, measured as a percent of sales of product, increased in the first nine months of 2024 when compared to the first nine months of 2023.

Cost of Product

Cost of product includes manufacturing, engineering and freight costs.

Cost of product, measured as a percent of sales of product, increased in the first quarter of 2025 when compared to the first quarter of 2024.

These costs were partially offset by a sales price benefit.

Costs of Software and Rentals

Costs of software and rentals includes compensation-related costs associated with installation, training and maintenance for our software products, and depreciation, maintenance and refurbishment cost and freight costs related to our hardware rental units.

Costs of software and rentals, measured as a percent of sales of software and rentals, increased during the third quarter of 2024 as compared to the same period last year due to the impact of lower rental equipment revenue.

Costs of software and rentals, measured as a percent of sales of software and rentals, were flat for the first nine months of 2024 as compared to the same period last year driven by higher software sales offset by higher compensation costs and lower rental revenue.

Three months ended September 30, Nine months ended September 30,

(Percent of total net sales) 2024 2023 Change 2024 2023 Change

Cost of Software and Rentals

Cost of software and rentals includes compensation-related costs associated with installation, training and maintenance for our software products, and depreciation, maintenance and refurbishment cost and freight costs related to our hardware rental units.

Cost of software and rentals, measured as a percent of sales of software and rentals, decreased slightly during the first quarter of 2025 as compared to the same period last year due to the impact of higher software revenue.

Three months ended March 31,

(Percent of total net sales) 2025 2024 Change

Selling, general and administrative (SG&A) 37.1 % 29.6 % 7.5 %

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Selling, General and Administrative

SG&A, measured as a percent of total net sales, increased in both the third quarter and first nine months of 2024 when compared to the same periods last year.

The increase in both periods was driven by higher compensation, including equity- based awards, and higher costs associated with both initial stand-up and ongoing operations to support a standalone company.

SG&A, measured as a percent of total net sales, increased in the first quarter of 2025 when compared to the same period last year.

The increase was driven by higher compensation, including equity-based awards, and higher costs associated with both initial stand-up and ongoing operations to support a standalone company.

Research and Development

R&D, measured as a percent of total net sales, increased in both the third quarter and the first nine months of 2024 when compared to the same periods last year due to higher compensation costs.

R&D, measured as a percent of total net sales, decreased in the first quarter of 2025 when compared to the same period last year due to similar costs year-on-year in relation to higher net sales.

Interest Expense, Net and Other Expense (Income), Net

Three months ended September 30, Nine months ended September 30,

(Dollars in millions) 2024 2023 2024 2023

Three months ended March 31,

(Millions) 2025 2024

Interest expense, net $ 104 $ 39

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Interest expense, net includes interest accrued on debt obligations, offset by interest income from cash and marketable securities.

Interest expense, net increased in both the third quarter and first nine months of 2024 as compared to the same periods last year due to interest incurred on the February 2024 issuance of senior notes and March draw on the senior term loan credit facilities.

Interest expense, net increased in the first quarter of 2025 as compared to the same period last year due to a full quarter of interest incurred related to the February 2024 issuance of senior notes and March 2024 draw on the senior term loan credit facilities.

Refer to Note 9 to the financial statements for more information.

This increase was partially offset by interest earned from cash and marketable securities held during the period.

Other expense (income), net includes the non-service component of periodic pension cost, investment gains and losses, and currency-related impacts from foreign currency translation.

Other expense (income), net decreased slightly for the third quarter of 2024 as compared to the same period last year.

Other expense (income), net increased for the first nine months of 2024 as compared to the same period last year resulting from charges associated with the substantial liquidation of foreign operations completed as part of our separation from 3M.

Provision (benefit) for Income Taxes:

Three months ended September 30, Nine months ended September 30,

Other expense (income), net includes the non-service component of periodic pension cost, investment gains and losses, and foreign currency transaction gain (loss).

Other expense (income), net decreased slightly for the first quarter of 2025 as compared to the same period last year as lower currency-related impacts were offset by higher non-service pension costs from plans that transferred at the end of March 2024.

Provision for (benefit from) Income Taxes:

Three months ended March 31,

(Percent of pre-tax income/loss) 2025 2024

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Performance by Business Segment

Note 14 to the audited combined financial statements within the Company’s Information Statement provides an overview of Solventum’s business segments.

In addition, disclosures relating to Solventum’s segments are provided in Note 15 to the accompanying condensed consolidated and combined financial statements.

Note 17 to the condensed consolidated financial statements provides an overview of Solventum’s business segments in addition to disclosures relating to Solventum’s segments.

We manage our operations in four business segments.

The reportable segments are MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.

Our reportable segments are MedSurg, Dental Solutions, Health Information Systems, and Purification and Filtration.

Our Chief Operating Decision Maker evaluates segment operating performance using net sales and business segment operating income.

Corporate and Unallocated

In addition to the four business segments, the Company assigns certain costs to “ Corporate and Unallocated, ” which is presented separately in Note 15 to the condensed consolidated and combined financial statements.

Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, benefits or costs related to capitalized manufacturing variances, Spin-Off and separation related costs and other net costs that the Company chose not to allocate directly to its business segments.

Spin-Off and separation related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone Company, including system implementations, manufacturing relocation, legal entity separation, certain equity awards granted as part of the Spin-Off, profit mark-ups on transition service arrangements with 3M and other one-time costs.

Corporate and Unallocated also includes sales and cost of sales related to product supplied to 3M and other supply agreements related to legacy 3M non-health care business that were assumed by the Company at Spin-Off.

Certain items are maintained at the corporate level and not allocated to the segments ("Corporate and Unallocated").

Corporate and Unallocated includes amortization of acquired intangible assets, restructuring and related charges, and benefits or costs related to capitalized manufacturing variances.

In addition, Corporate and Unallocated includes Spin-Off and separation related costs.

Spin-Off and separation related costs include any costs incurred as part of our separation from 3M and costs to setup operations as a standalone company, including system implementations, manufacturing relocations, legal entity separations, certain equity awards granted as part of the Spin-Off, profit mark-ups on transition service arrangements with 3M and other one-time costs.

Corporate and Unallocated also includes sales and cost of sales related to our supply agreements with 3M and other supply agreements assumed by the Company at Spin-Off related to legacy 3M businesses.

Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated net operating loss increased in both the third quarter and the first nine months of 2024 when compared to the same period last year as the Company had higher Spin-Off and separation related costs.

Operating Business Segments

Information related to the Company’s segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.

Refer to the section entitled “Business” in Solventum’s Information Statement for discussion of products that are included in each business segment.

MedSurg (56.8% and 56.0% of consolidated sales for the three and nine months ended September 30, 2024)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Net sales (millions)

$ 1,182 $ 1,180 $ 3,463 $ 3,464

MedSurg (55.9% of consolidated sales for the three months ended March 31, 2025 )

Three months ended March 31,

(Millions) 2025 2024

Net sales $ 1,157 $ 1,119

Increase/(decrease)

1.0 % 1.4 % 1.1 % 1.4 %

(0.7) — (0.5) — %

Organic growth 6.0 % 0.1 %

Constant currency 5.0 0.1

Currency impact

(0.1) 0.6 (0.6) (1.1 %)

0.1 % 2.0 % — % 0.3 %

Business segment operating income (millions)

$ 243 $ 307 $ 678 $ 829

Reported growth 3.4 % (0.4) %

Business segment operating income $ 206 $ 221

Percent change (6.6) % (12.6) %

Percent of sales 17.8 % 19.7 %

Third quarter 2024 results

First quarter 2025 results

Sales in MedSurg were up 3.4%:

• Organic sales growth was driven by volumes, including a benefit from I.V.

site management and medical OEM products, partially offset by traditional negative pressure wound therapy.

• Volume growth continues to benefit from single-use negative pressure wound therapy.

• Organic growth was driven by strong broad-based volumes in Infection Prevention and Surgical Solutions, led by I.V.

site management and hospital consumables.

• Advanced Wound Care volumes grew, driven by single-use negative pressure wound therapy consumables.

• Other includes lost sales from certain health care businesses in India retained by 3M in connection with the Spin-Off.

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The decrease was driven by higher costs to stand-up and operate our standalone structure after Spin-Off.

First nine months 2024 results

Sales in MedSurg were flat:

• Positive price growth was driven by the impact from actions initiated during the prior year in response to higher material and labor input costs.

The favorable impact of prior year price actions has and will continue to decline during the remainder of 2024.

• Organic growth was led by I.V.

site management, medical OEM products, and single-use negative pressure wound therapy, partially offset by declines in sterilization assurance products and traditional negative pressure wound therapy.

• Other includes certain health care businesses retained by 3M India in connection with the Spin-Off.

• Foreign currency translation negatively impacted sales by (0.6%).

Business segment operating income margin decreased when compared to the same period last year.

The decrease was driven by higher costs to stand-up and operate our standalone structure after Spin-Off.

Dental Solutions (15.0% and 15.8% of consolidated sales for the three and nine months ended September 30, 2024)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Net sales (millions)

$ 313 $ 331 $ 979 $ 1,023

Dental Solutions (15.8% of consolidated sales for the three months ended March 31, 2025)

Three months ended March 31,

(Millions) 2025 2024

Net sales $ 328 $ 335

Increase/(decrease)

(3.9) % 7.7 % (1.8) % 3.2 %

(1.2) (2.1) (1.9) (0.6)

Organic growth 0.4 % 0.4 %

Constant currency (0.2) (1.4)

Currency impact

— 1.5 (0.6) (1.0)

(5.2) % 7.1% (4.3) % 1.6 %

Business segment operating income (millions) $ 72 $ 114 $ 272 $ 349

Reported growth (2.1) % (1.8) %

Business segment operating income $ 78 $ 110

Percent change (28.6) % (0.9) %

Percent of sales 23.9 % 32.8 %

Third quarter 2024 results:

Sales in Dental Solutions were down (5.2)%:

• Lower volumes were driven by soft end-market demand.

• Other includes lost sales from the Company’s dental anesthetics business that was sold in August 2023 as well as certain health care businesses retained by 3M India in connection with the Spin-Off.

• Foreign currency translation impact to sales was flat.

Business segment operating income margin decreased when compared to the same period last year as a result of higher costs to stand-up and operate our standalone structure after Spin-Off in addition to the impact of lower sales volumes.

First nine months 2024 results:

First quarter 2025 results:

Sales in Dental Solutions were down (2.1)%:

• Volume declines were partially offset by positive price growth.

The favorable impact of prior year price actions decreased during the period and the impact of such price actions has and will continue to moderate through the remainder of 2024.

• Other is primarily driven by lost sales from the Company’s dental anesthetics business that was sold in August 2023 as well as certain health care businesses retained by 3M India in connection with the Spin-Off.

• Organic growth in restorative and prevention solution products offset by declines in traditional orthodontic products.

• Other includes lost sales from certain health care businesses retained by 3M India in connection with the Spin-Off.

• Foreign currency translation negatively impacted sales by (1.9%).

Health Information Systems (15.7% and 15.7% of consolidated sales for the three and nine months ended September 30, 2024)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Net sales (millions)

$ 326 $ 321 $ 971 $ 953

Health Information Systems (15.9% of consolidated sales for the three months ended March 31, 2025)

Three months ended March 31,

(Millions) 2025 2024

Net sales $ 329 $ 317

Increase/(decrease)

1.5 % 3.9 % 1.8 % 5.2 %

Organic growth 3.9 % 0.3 %

Constant currency 3.8 0.3

Currency impact

0.1 0.3 — (0.1)

1.5 % 4.2 % 1.8 % 5.1 %

Business segment operating income (millions) $ 105 $ 114 $ 317 $ 304

Reported growth 3.6 % 0.3 %

Business segment operating income $ 109 $ 101

Percent change 8.0 % 7.4 %

Percent of sales 33.1 % 31.9 %

Third quarter 2024 results:

Sales in Health Information Systems were up 1.5%:

• Positive growth was driven by continued adoption of our 3M TM 360 Encompass TM , partially offset by performance management solutions and clinician productivity solutions.

• Clinician productivity solutions declined primarily due to impacts from changing market conditions.

Business segment operating income margin decreased when compared to the same period last year driven by higher compensation costs.

First nine months 2024 results:

First quarter 2025 results:

Sales in Health Information Systems were up 3.6%:

• Positive growth was driven by continued adoption of our 3M TM 360 Encompass TM and performance management solutions.

• Clinician productivity solutions declined primarily due to impacts from changing market conditions.

Business segment operating income margin increased when compared to the same period last year driven by a product mix benefit due to higher software sales and lower professional services, partially offset by higher compensation costs.

Purification and Filtration (11.4% and 11.7% of consolidated sales for the three and nine months ended September 30, 2024)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Net sales (millions)

$ 238 $ 242 $ 721 $ 721

• Organic growth was driven by continued adoption of our 3M TM 360 Encompass TM .

• Foreign currency translation negatively impacted sales by (0.3%).

Business segment operating income margin increased when compared to the same period last year driven by temporary savings from the Company's Solventum Way restructuring program, partially offset by higher compensation costs.

Purification and Filtration (11.7% of consolidated sales for the three months ended March 31, 2025)

Three months ended March 31,

(Millions) 2025 2024

Net sales $ 242 $ 245

Increase/(decrease)

(0.3) % 1.4 % 1.7 % (3.8) %

(1.1) — (0.9) —

Organic growth 2.2 % 6.7 %

Constant currency 1.1 6.7

Currency impact

— 1.6 (0.7) (1.0)

(1.5) % 3.0 % 0.1 % (4.8) %

Business segment operating income (millions) $ 20 $ 48 $ 78 $ 134

Reported growth (0.9) % 6.1 %

Business segment operating income $ 35 $ 39

Percent change (9.1) % 8.3 %

Percent of sales 14.5 % 15.9 %

Third quarter 2024 results:

First quarter 2025 results:

Sales in Purification and Filtration were down (0.9)%:

• Primarily driven by declines in drinking water filtration and membrane OEM product categories, partially offset by continued strength in bioprocessing filtration product category and added capacity coming online for industrial filtration product category.

• Other includes certain business in India retained by 3M in connection with the Spin-Off.

• Foreign currency translation impact to sales was flat.

Business segment operating income margin decreased due to a negative impact from costs to stand-up and operate our standalone structure after Spin-Off and sales mix.

First nine months 2024 results:

Sales in Purification and Filtration were up 0.1%:

• Primarily driven by higher volume growth in our bioprocessing filtration product category.

This growth was partially offset by a decline in our industrial filtration and drinking water filtration product categories.

• Other includes certain health care businesses retained by 3M India in connection with the Spin-Off.

• Foreign currency translation negatively impacted growth by (0.7%).

Business segment operating income margin decreased due to the negative impact from costs to stand-up and operate our standalone structure after Spin-Off and sales mix.

• Organic growth was driven by continued strength in bioprocessing filtration and industrial filtration, which benefited from added production capacity, partially offset by declines in membrane OEM products.

• Other includes lost sales from certain health care businesses in India retained by 3M in connection with the Spin-Off.

• Foreign currency translation negatively impacted sales by (2.0)%.

Business segment operating income margin decreased due to a negative impact from higher compensation-related costs and costs to stand-up and operate our standalone structure after Spin-Off, partially offset by benefits from sales mix.

Financial Condition and Liquidity

The strength and stability of Solventum’s operating model and strong free cash flow capability provides financial flexibility and enables the Company to invest through business cycles.

Historically, Solventum generated positive operating cash flows and a majority of such cash flows were transferred to 3M as part of 3M’s cash pooling arrangements, the effect of which is presented as Net parent investment in our condensed combined financial statements.

Upon completion of the Spin-Off, Solventum has ceased participation in 3M's cash pooling arrangement and our cash and cash equivalents are held and used solely for our own operations.

The Company's capital structure, long-term commitments and sources of liquidity will change significantly from historical practices.

For additional detail regarding changes to our capital structure, refer to the section entitled “ Description of Material Indebtedness ” in Solventum's Information Statement.

Historically, Solventum generated positive operating cash flows and a majority of such cash flows were transferred to 3M as part of 3M’s cash pooling arrangements, the effect of which is presented as Net transfers to 3M in our consolidated financial statements.

Debt and Credit Facilities

On February 16, 2024, the Company entered into a five-year $2.0 billion unsecured revolving credit facility expiring in 2029, an 18-month senior unsecured term loan facility of $500 million and a three-year senior unsecured term loan facility of $1.0 billion (collectively, the “ Facilities ” ).

In March 2024, the Company withdrew $1.48 billion under the Facilities.

The funds from the Facilities were transferred to 3M as partial consideration for the Spin-Off.

On February 27, 2024, Solventum issued $6.9 billion of Senior Notes in preparation for the payment of partial consideration to 3M Company in connection with the Spin-Off.

In August 2024, the Company repaid $200 million of the outstanding principal amount from the 18-month senior unsecured term loan credit facility.

Refer to Note 8 for more information.

Refer to Note 9 of the Company's condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information on the Company's long-term debt and short-term borrowings.

The Company had approximately $51 million and $40 million in bank guarantees, surety bonds, and other similar instruments issued and outstanding at March 31, 2025 and December 31, 2024, respectively.

These instruments are utilized in connection with normal business activities.

Commercial Paper

On March 4, 2024, the Company entered into a commercial paper program that allows it to issue up to an $2.0 billion aggregate principal amount of short-term notes to finance short-term liabilities.

On March 4, 2024, the Company entered into a commercial paper program that allows it to issue up to $2.0 billion aggregate principal amount of short-term notes to finance short-term liabilities.

Any such issuance will mature within 364 days from date of issue.

There was no commercial paper outstanding as of September 30, 2024.

There was no commercial paper outstanding as of March 31, 2025.

Cash, cash equivalents and marketable securities

As of September 30, 2024, Solventum had $772 million of cash and cash equivalents, of which approximately $570 million was held by the Company’s foreign subsidiaries and approximately $202 million was held in the United States.

As of March 31, 2025, Solventum had $534 million of cash and cash equivalents, of which approximately $447 million was held by the Company’s foreign subsidiaries and approximately $92 million was held in the United States.

$5 million of cash and cash equivalents held for sale are included in the geographic breakout.

These balances are invested in bank instruments and other high-quality fixed income securities.

As of December 31, 2024, Solventum had $762 million of cash and cash equivalents, of which approximately $611 million was held by the Company’s foreign subsidiaries and $151 million was held in the United States.

The increase from December 31, 2023 resulted from both cash retained by the Company at Spin-Off and operating cash generated by the Company subsequent to the Spin-Off.

There were immaterial amounts of marketable securities at both March 31, 2025 and December 31, 2024.

The decrease from December 31, 2024 resulted from coupon payments on the Senior Notes, interest payments on the Facilities, and prepayment of the 18-month senior unsecured term loan credit facility.

Cash flows from operating, investing and financing activities are provided in the tables that follow.

Individual amounts in the condensed consolidated and combined statements of cash flows exclude the effect of exchange rate impacts on cash and cash equivalents, which are presented separately in the cash flows.

Individual amounts in the condensed consolidated statements of cash flows exclude the effect of exchange rate impacts on cash and cash equivalents, which are presented separately in the cash flows.

Thus, the amounts presented in the following operating, investing and financing activities tables reflect changes in balances from period to period adjusted for these effects.

Cash Flows from Operating Activities:

Nine months ended September 30,

(Millions) 2024 2023

Cash Flows from Operating Activities

Net income $ 448 $ 1,074

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization 405 422

Postretirement benefit plan expense 30 31

Stock-based compensation expense 87 32

Gain on business divestitures — (56)

Deferred income taxes (93) (99)

Changes in assets and liabilities

Accounts receivable 14 (24)

Due from related parties

Inventories (99) (7)

Accounts payable 200 48

Due to related parties

All other operating activities 167 (53)

Net cash provided by operating activities $ 966 $ 1,368

In the first nine months of 2024, cash flows provided by operating activities decreased compared to the first nine months of 2023 primarily due to lower net income, partially offset by payments from related parties.

The benefit in accounts payable is largely offset by amounts due to related parties as the Company reimburses 3M for certain procurement activities managed through 3M's IT systems.

In addition to this procurement activity, due to related parties also includes cash paid to 3M for operating transactions with Solventum entities prior to the Spin-Off and the net impact of payables and associated payments related to transition agreements with 3M.

Cash Flows from Investing Activities:

Nine months ended September 30,

(Millions) 2024 2023

Cash Flows from Investing Activities

Purchases of property, plant and equipment $ (253) $ (202)

Proceeds from sale of business — 60

Net cash used in investing activities $ (253) $ (142)

Purchases of property, plant and equipment increased in the first nine months of 2024 as compared to the first nine months of 2023.

The increase is primarily driven by the timing of investment spend.

The Company is focused on investments to support growth, renewal and maintenance programs, environmental health services, and relocating manufacturing operations currently co-located within 3M facilities.

Cash Flows from Financing Activities:

Nine months ended September 30,

Three months ended March 31,

(Millions) 2025 2024

Cash Flows from Financing Activities

Repayment of debt $ (200) $ —

Net transfers to 3M (8,247) (1,248)

Proceeds from long-term debt, net of issuance costs 8,303 —

Other — net 8 2

Net cash provided by (used in) financing activities $ (136) $ (1,246)

Repayment of debt is related to the August 2024 repayment of $200 million outstanding principal from the 18-month senior unsecured term loan credit facility.

Proceeds from debt of $8.3 billion were related to the first quarter issuance of $6.9 billion in senior notes and $1.5 billion in senior term loan credit facilities.

The proceeds from these financing transactions were transferred to 3M in connection with the Spin-Off transaction, other than the amounts retained in order to achieve the $600 million retained cash target.

Cash provided by (used in):

Operating activities $ 29 $ 442

Investing activities (114) (102)

Financing activities (139) 462

Effect of exchange rate changes on cash and cash equivalents 1 —

Net increase (decrease) in cash and cash equivalents $ (223) $ 802

Operating Activities

For the first quarter of 2025, cash flows provided by operating activities decreased compared to the first quarter of 2024 primarily due to lower net income.

Cash flow activity with 3M is reflected in the due from and due to related parties.

This activity includes settlement of payables and receivables transferred at Spin-Off related to operating transactions between 3M and Solventum entities that occurred prior to the Spin-Off and transactions under the transition agreements with 3M.

Investing Activities

Purchases of property, plant and equipment increased in the first quarter of 2025 as compared to the first quarter of 2024.

The increase is primarily driven by additional separation related capital spending as the Company relocates manufacturing and source of supply from 3M.

In addition, the Company is focused on investments to support growth, renewal and maintenance programs, and environmental health services.

Financing Activities

For the first quarter of 2025, cash flows used by financing activities increased as compared to the first quarter of 2024, primarily due to the Company's repayment of $100 million outstanding principle issued under the senior term loan credit facilities.

Material Cash Requirements from Known Contractual and Other Obligations:

Solventum’s material cash requirements from known contractual and other obligations primarily relate to the following, for which information on both a short-term and long-term basis is provided in the indicated notes to the condensed consolidated and combined financial statements and the audited combined financial statements included in the Information Statement:

• Tax obligations—Refer to Note 9 to the audited combined financial statements and Note 7 to the unaudited condensed consolidated and combined financial statements.

• Debt—Refer to Note 8 to the unaudited condensed consolidated and combined financial statements.

• Commitments and contingencies—Refer to Note 11 to the audited combined financial statements and Note 11 to the unaudited condensed consolidated and combined financial statements.

• Operating leases—Refer to Note 12 to the audited combined financial statements.

• Tax obligations—Refer to Note 8 to the condensed consolidated financial statements.

• Debt—Refer to Note 9 to the condensed consolidated financial statements.

• Commitments and contingencies—Refer to Note 12 to the condensed consolidated financial statements.

Solventum purchases the majority of its materials and services as needed, with no unconditional commitments.

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Cautionary Note Concerning Forward Looking Statements

This Quarterly Report on Form 10-Q, including “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Part I, Item 2, contains or incorporates by reference statements that relate to future events and expectations and, as such, constitute forward-looking statements that involve risk and uncertainties.

This Quarterly Report on Form 10-Q, including “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Part I, Item 2, and other materials Solventum has filed or will file with the SEC (and oral communications that Solventum may make) contain or incorporates by reference statements that relate to future events and expectations and, as such, constitute forward-looking statements that involve risk and uncertainties.

Forward-looking statements include those containing such words as “ anticipates, ” “ believes, ” “ could, ” “ estimates, ” “ expects, ” “ forecasts, ” “ goal, ” “ guidance, ” “ intends, ” “ may, ” “ outlook, ” “ plans, ” “ projects, ” “ seeks, ” “ sees, ” “ should, ” “ targets, ” “ will, ” “ would, ” or other words of similar meaning.

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• the effects of, and changes in, worldwide economic, political, regulatory, international, trade and geopolitical conditions, natural disasters, war, public health crises, and other events beyond Solventum’s control;

• unexpected events, such as those related to the COVID-19 public health crisis;

• operational execution risks;

• damage to our reputation or our brands;

• risks from acquisitions, strategic alliances, divestitures and other strategic events;

• risks from acquisitions, strategic alliances, divestitures and other strategic events, including the divestiture of our Purification and Filtration business;

• Solventum’s business dealings involving third-party partners in various markets;

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• security breaches and other disruptions to information technology infrastructure;

• Solventum’s failure to obtain, maintain, protect, or effectively enforce its intellectual property rights;

• Solventum’s failure to obtain, maintain, protect, or effectively enforce its intellectual property (“IP”) rights;

• pension and postretirement obligation liabilities;

• any failure by 3M to perform any of its obligations under the various separation agreements in connection with the separation and distribution;

• any failure to realize the expected benefits of the separation, and/or that the separation will not be completed within the expected time frame, on the expected terms or at all;

• a determination by the IRS or other tax authorities that the distribution or certain related transactions should be treated as taxable transactions;

• expected financing transactions undertaken in connection with the separation and risks associated with additional indebtedness;

• any failure by 3M to perform any of its obligations under the various separation agreements in connection with the Spin-Off;

• any failure to realize the expected benefits of the Spin-Off, and/or that the Spin-Off will not be completed within the expected time frame, on the expected terms or at all;

• a determination by the IRS or other tax authorities that the Spin-Off or certain related transactions should be treated as taxable transactions;

• financing transactions undertaken in connection with the separation and risks associated with additional indebtedness;

• the risk that incremental costs of operating on a standalone basis (including the loss of synergies), costs of restructuring transactions and other costs incurred in connection with the separation will exceed Solventum’s estimates;

• the impact of the separation on its businesses and the risk that the separation may be more difficult, time-consuming or costly than expected, including the impact on its resources, systems, procedures and controls, diversion of

• the impact of the Spin-Off on its businesses and the risk that the Spin-Off may be more difficult, time-consuming or costly than expected, including the impact on its resources, systems, procedures and controls, diversion of

management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

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Important information as to these factors can be found in this document, including, among others, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” under the headings of “ Overview, ” “ Financial Condition and Liquidity ” and annually in “ Critical Accounting Estimates.

” Discussion of these factors is incorporated by reference from Part II, Item 1A, “ Risk Factors, ” of this document, and should be considered an integral part of Part I, Item 2, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations.

” For additional information concerning factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Form 8-K filed with the SEC from time to time and the Company's Registration Statement on Form 10, including the amendments thereto, as filed with the SEC.

” Discussion of these factors is incorporated by reference from Part I, Item 1A, “ Risk Factors, ” of this document, and should be considered an integral part of Part I, Item 2, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations.

” For additional information concerning factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Form 8-K filed with the SEC from time to time and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC.

Any forward-looking statement speaks only as of the date on which it is made, and Solventum assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis