Solventum SOLV reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.41, which beat the Zacks Consensus Estimate of $1.31 by 7.6%. The bottom line declined 35% year over year.

GAAP EPS in the quarter was 17 cents, down 89.2% from the year-ago quarter’s level.

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Revenue Details

The company reported revenues of $2.07 billion, up 1.9% reportedly from the prior-year recorded number. Organically, sales were up 2.3%. The metric beat the Zacks Consensus Estimate by 1.2%.  Organic sales growth was majorly driven by the Dental Solutions and Purification and Filtration segments.

However, shares of the company were down 4.1% during after-hours trading on Feb. 27, despite a strong quarterly performance. The stock has risen 30.3% in the past six months, against the industry’s decline of 14.5%. The S&P 500 Index gained 5.3% in the same period.

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SOLV’s Full-Year 2024 Results

For 2024, SOLV registered total sales of $8.25 billion, up 0.7% compared with 2023. Solventum reported adjusted EPS of $6.70 for 2024, down 30.8% compared with 2023.

Segmental Details

MedSurg

Revenues from this segment totaled $1.17 billion, up 0.5% reportedly and 1.8% organically year over year. Organic growth was driven by volumes in Advanced Wound Care, Medical OEM products and continued strength for single-use NPWT.

Dental Solutions

Revenues totaled $315 million, up 3% year over year reportedly and 4.2% organically. Volume-driven improvement benefited from easing year-over-year comparisons and early adoption of recent product launches.

HIS

Revenues from this segment amounted to $336 million, up 1.1% reportedly and organically on a year-over-year basis. Organic growth was driven by the continued adoption of 360 Encompass revenue cycle management, partially offset by lower revenues from performance management solutions and clinician productivity solutions.

Purification and Filtration

Revenues from this segment amounted to $235 million, up 2% year over year reportedly and 3.5% organically. Growth was driven by continued strength in bioprocessing filtration and added capacity for industrial filtration offset by volume pressure in membranes.

Margins

Adjusted gross profit was $1.17 billion, up 0.2% year over year. As a percentage of revenues, the adjusted gross margin was 56.2%, down approximately 100 bps from the prior-year quarter’s figure.

Selling, general and administrative expenses totaled $784 million, up 39.5% year over year.

Research and development expenses totaled $199 million, up 4.7% on a year-over-year basis.

Adjusted operating income totaled $422 million, down 20.1% year over year. As a percentage of revenues, the adjusted operating margin was 20.4%, down approximately 550 bps from the prior-year quarter’s figure.

Financial Position

Solventum exited the fourth quarter with cash, cash equivalents and investments of $762 million compared with $772 million in the previous quarter.

Total assets increased to $14.46 billion from $14.75 billion in the previous quarter.

2025 Guidance Issued

Solventum has provided its sales and adjusted earnings guidance for 2025. Solventum expects organic sales growth of 1% to 2% (1.5% to 2.5% excluding ~50bps of SKU Exit impact). The Zacks Consensus Estimate for the same is pegged at $8.27 billion.

SOLV expects 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 and EPS Surprise

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

Our Take

Solventum exited the fourth 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 decline in adjusted EPS year over year 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, and it will focus on debt reduction, portfolio optimization, and operational efficiency. These initiatives look promising for the company’s long-term prospects.

SOLV’s Zacks Rank and Key Picks

Solventum currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. CAH, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2025 adjusted EPS of $1.93, beating the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion outpaced the consensus mark by 0.7%. 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 10.7%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

ResMedreported second-quarter fiscal 2025 adjusted EPS of $2.43, beating the Zacks Consensus Estimate by 5.7%. Revenues of $1.28 billion surpassed the Zacks Consensus Estimate by 1.6%. It currently carries a Zacks Rank #2.

ResMedhas a long-term estimated growth rate of 16%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Boston Scientificreported fourth-quarter 2024 adjusted EPS of 70 cents, beating the Zacks Consensus Estimate by 7.7%. Revenues of $4.56 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2.

Boston Scientifichas a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

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

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