One-glance verdict
Undervalued
$225.37 our estimate vs market $89.50
Wall Street consensus: $93.92 (-58.3% lower than our fair-value estimate)
60% below our estimate, below the bear case
Fundamentals snapshot
Solventum Corporation
SOLV · NYQ · Healthcare · Medical Instruments & Supplies
Current price
$89.50
52-week range
$62.38 - $94.16
Market cap
$15.24B
Balance sheet
Stretched
1.82x Concerning
Net debt $4.89B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Returns 34.0% on equity, ahead of 83% of its peers.
- Reward Free cash flow was positive in 3/10 years.
- Risk Forward P/E (12.4x) is higher than trailing (10.9x) - earnings are expected to drop.
- Risk Operating margin compressed from 20.8% to 9.8% over 3 years.
What this company does
Solventum Corporation
Solventum is a healthcare company that sells a wide range of essential products to hospitals, clinics, and dental offices, from advanced wound dressings to orthodontic aligners. The company makes its money by providing these necessary medical and dental goods, along with specialized software that helps healthcare systems manage patient information and billing. Because these products are critical for daily healthcare operations, Solventum serves a fundamental need in the medical industry.
How the company got here
Solventum is a new name in healthcare, but its business has a long history. It was the healthcare division of the large industrial company 3M for over 70 years. In 2022, 3M decided to spin off (separate into a new, independent company) its healthcare business to allow both companies to better focus on their specific markets. This separation was completed on April 1, 2024, when Solventum began operating on its own and was listed on the New York Stock Exchange. The name Solventum comes from the words "solving" and "momentum," reflecting its goal of creating innovative healthcare solutions.
What it actually does
Solventum creates a wide range of products and services used in hospitals, clinics, and dental offices. Think of things like advanced wound dressings and therapies you might see in a hospital, materials your dentist uses for fillings or braces, and software that helps hospitals manage patient information. The company combines its expertise in medical supplies, materials science, and data to create these products. Their goal is to help healthcare professionals do their jobs better and improve the lives of patients.
Medsurg
This is Solventum's largest business segment, making up more than half of the company's revenue. It provides medical and surgical supplies to hospitals and clinics. This includes advanced wound care products, like special dressings and therapies to help heal serious wounds, as well as items to prevent infections and surgical supplies used in operating rooms. You might also recognize their Littmann stethoscopes, medical tapes, and products for keeping patients warm during surgery.
Dental Solutions
This part of the company focuses on products for dentists and orthodontists. They make materials used for fillings, crowns, and bonding teeth, with well-known brands like Filtek™ and Scotchbond™. They also provide orthodontic solutions, such as brackets and clear aligners for straightening teeth. Essentially, this segment provides many of the supplies your dentist or orthodontist uses to take care of your teeth.
Health Information Systems
This segment provides software solutions for hospitals and healthcare systems. A major focus is on helping doctors and hospitals with clinical documentation, which is the process of recording patient information. They offer software that uses artificial intelligence to help turn a doctor's spoken notes into accurate medical records and automate the medical coding process for billing. This helps reduce the administrative workload for doctors and ensures that hospitals are paid correctly for the care they provide.
What management is betting on now
Now that it is an independent company, Solventum's management is focused on growing its business and operating more efficiently than it could as part of 3M. A key priority is to accelerate growth in its most promising areas, like advanced wound care and health information software. The company is also working to improve its profitability by simplifying its operations and managing its supply chain (the network of companies that provide the materials to make its products) more effectively. By focusing solely on healthcare, the leadership aims to innovate faster and create more value for its customers and investors.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$76.00M
FY2024 Q4
$92.00M
FY2025 Q1
$-80.00M
FY2025 Q2
$59.00M
FY2025 Q3
$-21.00M
FY2025 Q4
$32.00M
FY2026 Q1
$-273.00M
FY2026 Q2
$144.00M
Revenue
$2.21B
Net income
$92.00M
Diluted EPS
0.53
Operating cash flow
$227.00M
Free cash flow
$144.00M
Fetching…
Sources
Revenue
$2.01B
Net income
$13.00M
Diluted EPS
0.07
Operating cash flow
$-189.00M
Free cash flow
$-273.00M
Fetching…
Sources
Revenue
$2.00B
Net income
$63.00M
Diluted EPS
0.37
Operating cash flow
$95.00M
Free cash flow
$32.00M
Fetching…
Sources
Revenue
$2.10B
Net income
$1.27B
Diluted EPS
7.22
Operating cash flow
$76.00M
Free cash flow
$-21.00M
Fetching…
Sources
Revenue
$2.16B
Net income
$90.00M
Diluted EPS
0.51
Operating cash flow
$169.00M
Free cash flow
$59.00M
Fetching…
Sources
Revenue
$2.07B
Net income
$137.00M
Diluted EPS
0.78
Operating cash flow
$29.00M
Free cash flow
$-80.00M
Fetching…
Sources
Revenue
$2.08B
Net income
$31.00M
Diluted EPS
0.18
Operating cash flow
$219.00M
Free cash flow
$92.00M
Fetching…
Sources
Revenue
$2.08B
Net income
$122.00M
Diluted EPS
0.70
Operating cash flow
$169.00M
Free cash flow
$76.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $225.37 vs current price $89.50
Wall Street consensus is the average analyst price target: $93.92 (-58.3% lower than our fair-value estimate).
Our most-likely fair value is $225.37 a share — about 151.8% above today's price of $89.50, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $4.9B. Interest coverage 1.8x.
Net debt
$4.89B
Interest coverage
1.82x
Solventum Corporation's profit covers its interest bill about 1.8 times over. and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Stretched
Worse cushion
Baseline
Better cushion
SOLV
BASELINE
Solventum Corporation
Total debt $5.30B Interest coverage 1.82x This is the baseline the peer rows are being compared against.
Total debt $9.67B Interest coverage 0.61x -66% vs SOLV Carries about 3.0x less debt cushion than SOLV.
Total debt $16.81B Interest coverage 4.87x +167% vs SOLV Carries about 2.7x more debt cushion than SOLV.
Total debt $120.84M Interest coverage 36.48x +1,903% vs SOLV Carries about 20.0x more debt cushion than SOLV.
Total debt $2.80B Interest coverage 6.83x +275% vs SOLV Carries about 3.7x more debt cushion than SOLV.
Total debt $1.59B Interest coverage 6.44x +254% vs SOLV Carries about 3.5x more debt cushion than SOLV.
What you should know
The case for and against SOLV
3 Rewards
2 Risks
Rewards
-
Returns 34.0% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 3/10 years.
-
Trades at 10.9x P/E vs peer median 28.7x (61.9% cheaper).
Risks
-
Forward P/E (12.4x) is higher than trailing (10.9x) - earnings are expected to drop.
-
Operating margin compressed from 20.8% to 9.8% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
10.94x
Forward P/E
12.38x
P/B
3.17x
P/S
1.83x
EV/EBITDA
17.67x
PEG ratio
1.22x
Profitability
How much profit each dollar creates
Gross margin
54.8%
Operating margin
9.8%
Net margin
17.3%
ROE
34.0%
ROA
2.7%
Health
Liquidity and balance-sheet strength
Debt / equity
1.10x
Current ratio
1.02x
Quick ratio
0.50x
Total debt
$5.30B
Total cash
$403.00M
Growth
How the business has been compounding
Revenue TTM
$8.31B
Revenue 5Y CAGR
0.8%
EPS TTM
8.18
EPS 5Y CAGR
4.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$209.00M
Free CF TTM
$-10.00M
FCF margin
-0.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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