AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 31/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · HIS contracts and embedded workflows establish a localized switching-cost advantage supported by upgrades and adoption. Its limited consolidated sales contribution and unproven exclusionary IP strength prevent a stronger issuer-wide assessment.
durability · 2/4 · Coding expertise, integration and long-term contracts support persistence, but renewal outcomes and contract lengths are missing. Dynamic competition and the proposed separation limit durability for Solventum shareholders.
customer dependency · 2/4 · Mission-critical HIS workflows and existing-customer upgrades support dependence, assessed partly from indirect operating evidence. Comparable dependency in the larger medical and dental businesses is unestablished.
erosion resilience · 2/4 · Continuing adoption and segment organic growth support resilience. Realized clinician-productivity weakness, increased pricing pressure and licensed-IP restrictions temper that evidence; advance orders also aided recent growth.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Prior Dental price actions and explicit first-half 2026 price contributions in Dental and HIS demonstrate realized pricing ability. Increased pricing pressure and absent price/volume elasticity data prevent a strong grade.
retention · 2/4 · Existing-customer upgrades, continued HIS adoption and embedded contracts support repeat demand. This is contractual and indirect operating evidence, without renewal rates or separation of retained demand from new wins.
margin resilience · 2/4 · Gross profit and continuing segment income improved, with pricing and operational savings contributing. Consolidated operating income fell, prior Dental margins faced cost pressure, and tariff refunds plus ERP timing supported second-quarter improvement.
contractual freedom · 1/4 · Disclosed prior approvals, government monitoring and long-term price commitments constrain pricing freedom. Some markets permit company-set prices, but affected revenue coverage and escalation rights are missing. The low grade reflects disclosed constraints, not assumed realized price cuts.
Predictability—
At least three consecutive published annual periods are required for predictability; missing years are not skipped.
Financial strength25
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- netDebtEbitGrade
- 61.88
- interestCoverageGrade
- 0.00
- currentRatioGrade
- 38.44
- Net debt / operating income (x)
- 1.91
- Current ratio (x)
- 1.23
- cashInterestPaid
- 442.00
- cashInterestCoverage
- 0.83
Capital allocation—
Missing annual observations required by this category.
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Completed divestiture and approximately $2 billion debt reduction support discipline. However, 2025 operating cash flow was below capital spending, and first-half 2026 repurchases of $355 million accompanied $38 million operating cash flow and $167 million capital spending. Acquisition and repurchase returns remain unestablished.
incentive alignment · 2/4 · Actual 2025 grants combined three-year performance awards and time-vesting equity; actual bonus payouts demonstrate implementation. Individual multipliers and $540 million compensation-specific cash-flow adjustments weaken alignment with reported outcomes. The adopted severance revision adds forfeiture provisions while preserving some benefits. Ownership compliance and eventual PSU vesting are missing.
execution · 2/4 · Adoption growth, higher continuing segment income, lower transition expenses and substantially completed restructuring demonstrate progress. Consolidated operating income and first-half cash flow declined, while advance orders and tariff refunds aided results. Attribution to management is partly inferred from operating outcomes.
governance · 2/4 · Independent board leadership and committees, independence of every director except the CEO, majority voting and trading policies support oversight. The classified board through 2028 limits accountability. Actual advisory compensation approval confirms a completed vote, not exceptional oversight effectiveness.
Evidence
Built on more than 40 years of medical coding expertise, Health Information Systems processes approximately 660 million clinical documents monthly and delivers mission-critical revenue cycle management, performance management and clinician productivity software through long-term contracts and deeply embedded workflows with health systems, physician practices and government payers.
HIS separation announcement: contracts, workflow integration and coding operations · Filed 05/08/2026
Growth was driven by both new customers and product upgrades at existing customers.
2024 Form 10-K: HIS 2023 results, existing-customer upgrades · Filed 28/02/2025
Health Information Systems (16.3% of consolidated sales for year ended December 31, 2025) Year ended December 31, (Millions) 2025 2024 2023 Net sales $ 1,360 $ 1,306 $ 1,285 Increase/(decrease) Organic growth 4.0 % 1.6 % Other — — Constant currency 3.9 1.6 Currency impact 0.2 — Reported growth 4.1 % 1.6 % Business segment operating income $ 496 $ 431 $ 423 Percent change 15.0 % 1.9 % Percent of sales 36.5 % 33.0 % 32.9 % Year 2025 results: Sales in Health Information Systems were up 4.1%: •Positive organic growth was driven by expanded adoption of our Solventum™ 360 EncompassTM and performance management solutions.
2025 Form 10-K: HIS sales, segment size and adoption · Filed 27/02/2026
Health Information Systems (16.0% and 16.5% of consolidated sales for the three and six months ended June 30, 2026)
Three months ended June 30,
Six months ended June 30,
(Millions)
2026
2025
2026
2025
Net sales
$
354
$
339
$
696
$
667
Increase/(decrease)
Organic growth
5.4
%
3.2
%
5.1
%
3.5
%
Other
(1.2)
—
(1.3)
—
Constant currency
4.2
3.2
3.8
3.5
Currency impact
0.2
0.2
0.5
—
Reported growth
4.4
%
3.4
%
4.3
%
3.5
%
Business segment operating income
$
145
$
120
$
276
$
229
Percent change
20.9
%
8.1
%
20.4
%
8.0
%
Percent of sales
41.0
%
35.5
%
39.6
%
34.3
%
34
Table of Contents
Second quarter 2026 results:
Sales in Health Information Systems were up 4.4%:
June 2026 Form 10-Q: HIS segment sales and operating results · Filed 05/08/2026
•Positive organic growth was driven by continued adoption of our Solventum™ 360 EncompassTM and performance management solutions.
June 2026 Form 10-Q: first-half HIS adoption · Filed 05/08/2026
The health care software technology market in which we conduct our business, and the healthcare information technology ("HCIT") industry in general, is highly competitive and dynamic, characterized by the continual introduction of new products and technologies.
2025 Form 10-K: healthcare software competition · Filed 27/02/2026
Principal competitors include Optum, Microsoft (Nuance), Epic, Oracle (Cerner), Waystar, Athena, and a host of start-up technologies actively working to disrupt the areas of revenue cycle management and clinician productivity.
2025 Form 10-K: named HIS competitors · Filed 27/02/2026
•Clinician productivity solutions declined primarily due to impacts from changing market conditions.
June 2026 Form 10-Q: clinician productivity decline · Filed 05/08/2026
•Announced the intent to separate its Health Information Systems business segment as part of the portfolio optimization phase of its transformation strategy.
Second-quarter 2026 results: announced intent to separate HIS · Filed 05/08/2026
No decision has been made regarding the ultimate structure or timing of any potential transaction, and there can be no assurance that a separation will occur.
HIS separation announcement: unresolved transaction structure and timing · Filed 05/08/2026
To protect our proprietary technologies, Solventum relies on a combination of patent, design, utility model, trademark, copyright, and trade secret protections as well as regulatory exclusivity periods and confidentiality agreements.
2025 Form 10-K: intellectual property protections · Filed 27/02/2026
While, in aggregate, our patents and other IP are vital to our operations, we do not consider any single IP asset or group of assets to be of material importance to any segment or to the business as a whole; rather, we believe understanding our customers’ needs, technology expertise, and manufacturing know-how are critical for our business.
2025 Form 10-K: limits of individual intellectual property assets · Filed 27/02/2026
•The 3M Agreements may limit Solventum’s ability to fully exploit certain intellectual property due to certain field of use restrictions on the licenses granted between the parties, which may permit 3M to compete with Solventum using intellectual property owned by or licensed to Solventum.
2025 Form 10-K: intellectual property field-of-use restrictions · Filed 27/02/2026
Pricing pressure has also increased due to continued consolidation among healthcare providers, trends towards managed care, the shift towards governments becoming the primary payers of healthcare expenses, reduction in reimbursement levels and medical procedure volumes and government laws and regulations relating to sales and promotion, reimbursement and pricing generally.
2025 Form 10-K: increased pricing pressure · Filed 27/02/2026
49 Table of Contents Year 2024 results: Sales in Dental Solutions were down (2.6%): •Volume declines associated with softening end-market demand were partially offset by the favorable impact of prior year price actions.
2025 Form 10-K: Dental 2024 volume and prior price actions · Filed 27/02/2026
Both volume and price contributed to growth, led by new products launched in the prior year.
June 2026 Form 10-Q: Dental first-half volume and pricing contributions · Filed 05/08/2026
Business segment operating income margin increased when compared to the same period last year, driven by price, favorable mix and savings from Transform for the Future.
June 2026 Form 10-Q: HIS pricing, mix and savings contributions · Filed 05/08/2026
•Organic growth was impacted by approximately $35 million or 5.2% due to advanced order timing ahead of the Company's U.S.
June 2026 Form 10-Q: Dental first-half advance-order benefit · Filed 05/08/2026
Financial Information Item 1. Financial Statements Solventum Corporation Condensed Consolidated Statements of Income (Unaudited) Three months ended June 30, Six months ended June 30, (Millions, except per share data) 2026 2025 2026 2025 Net sales of product $ 1,698 $ 1,668 $ 3,211 $ 3,265 Net sales of software and rentals 511 493 1,005 966 Total net sales 2,209 2,161 4,216 4,231 Cost of product 807 865 1,603 1,700 Cost of software and rentals 116 121 231 242 Gross profit 1,286 1,175 2,382 2,289 Selling, general and administrative expenses 927 772 1,754 1,541 Research and development expenses 178 189 367 381 Operating income 181 214 262 367 Interest expense, net 64 103 125 207 Other expense (income), net 9 8 13 19 Income before income taxes 108 103 123 141 Provision for (benefit from) income taxes 15 13 19 (86) Net income $ 92 $ 90 $ 105 $ 227 Earnings per share: Basic earnings per share $ 0.53 $ 0.52 $ 0.60 $ 1.31 Diluted earnings per share 0.53 0.51 0.60 1.30 Weighted-average number of shares outstanding: Basic 172.7 174.1 173.5 173.9 Diluted 173.3 175.2 174.4 175.0 The accompanying notes are an integral part of these condensed consolidated financial statements.
June 2026 Form 10-Q: consolidated income statement · Filed 05/08/2026
Adjusted operating income margin increased primarily due to a combination of IEEPA tariff refund and ERP-timing benefit.
Second-quarter 2026 results: tariff refund and ERP timing benefits · Filed 05/08/2026
•GAAP and adjusted gross margin both increased by 80 bps due to programmatic savings, portfolio moves, sales leverage and mix, partially offset by tariffs and inflation headwinds.
First-quarter 2026 results: gross margin savings and inflation offsets · Filed 05/05/2026
Business segment operating income margin decreased when compared to the same period last year as a result of higher logistics costs, tariffs and other costs to operate our standalone structure after Spin-Off.
2025 Form 10-K: Dental segment margin cost pressures · Filed 27/02/2026
In certain markets the pricing for certain of Solventum’s products may be subject to prior approval, including in jurisdictions where Solventum’s products are subject to government reimbursement, whereas in other markets Solventum may be able to set its own prices for its products subject to certain degrees of monitoring and control by the applicable governmental authority.
2025 Form 10-K: pricing approvals and governmental monitoring · Filed 27/02/2026
These price control mechanisms, and mechanisms in other markets, including long-term price commitments as the result of market dynamics, may restrict the amount Solventum is able to charge for its products, which may reduce its profits and otherwise adversely affect its business, results of operations or financial condition.
2024 Form 10-K: price controls and long-term price commitments · Filed 28/02/2025
Key accomplishments included: •Completing the divestiture of the Purification & Filtration business, enabling the Company to reduce debt by approximately $2 billion, strengthening its balance sheet allowing for stronger financial flexibility in the future; •Successful acquisition of Acera Surgical, expanding the Company’s advanced wound care portfolio with a business that is expected to be EPS accretive in 2027; 2026 Proxy statement 49 Compensation discussion and analysis •Successfully completed our first restructuring and enhancing the commercial teams to drive growth and innovation and launched five-year transformation and restructuring program to invest into the future, strengthen operating performance and fuel innovation for profitable growth; •Successfully executing on critical separation activities, including the ongoing ERP cutover and move to Solventum-owned distribution centers and manufacturing sites; •Building an experienced management team with strong MedTech experience and strong transformation experience, introducing significant new talent across the organization without creating disruption to the business or performance; and •Inspiring excellence and innovation through ongoing dedicated engagement with employees.
2026 proxy: completed divestiture, debt reduction and other reported accomplishments · Filed 27/03/2026
($ in millions) Fiscal year 2025 Major GAAP Cash Flow Categories Net cash provided by operating activities $ 369 Net cash provided by (used in) investing activities 2,797 Net cash used in financing activities (3,057) Free cash flow (non-GAAP) Net cash provided by operating activities 369 Purchases of property, plant and equipment (379) Free cash flow (non-GAAP) (10) Adjustments for compensation purposes1 540 Free cash flow (non-GAAP) 530 (1)Adjustments made by the Talent Committee for compensation purposes include impacts from the sale of the Company’s Purification and Filtration business, the Company’s separation from 3M, tariff-related impacts, and the Company’s acquisition of Acera Surgical.
2026 proxy: 2025 cash generation, capital spending and compensation adjustments · Filed 27/03/2026
6 Table of Contents Solventum Corporation Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, (Millions) 2026 2025 Cash Flows from Operating Activities Net income $ 105 $ 227 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 268 251 Pension and postretirement benefits 27 32 Stock-based compensation expense 89 83 Deferred income taxes (88) (177) Changes in assets and liabilities Accounts receivable (286) (15) Due from related parties 27 4 Inventories 18 (77) Accounts payable 26 23 Due to related parties (117) (6) Accrued compensation (101) (47) All other operating activities — net 68 (100) Net cash provided by operating activities 38 198 Cash Flows from Investing Activities Purchases of property, plant and equipment (167) (219) Other — net 3 (5) Net cash used in investing activities (164) (224) Cash Flows from Financing Activities Repayment of debt — (200) Proceeds from debt, net of issuance costs 46 — Net transfers from (to) 3M 2 (30) Purchases of treasury stock (355) — Other — net (44) (19) Net cash used in financing activities (350) (249) Effect of exchange rate changes on cash and cash equivalents 1 7 Net increase (decrease) in cash and cash equivalents (475) (268) Cash and cash equivalents at beginning of period 878 762 Less: cash and cash equivalents held for sale — (2) Cash and cash equivalents at end of period $ 403 $ 492 Supplemental Cash Flow Information Non-cash investing and financing activity: Right-of-use assets obtained in exchange for finance lease liability $ 204 $ — The accompanying notes are an integral part of these condensed consolidated financial statements.
June 2026 Form 10-Q: operating cash flow, capital spending and repurchases · Filed 05/08/2026
CEO target pay mix 92% At-Risk Average of other NEOs target pay mix 81% At-Risk Base Salary Annual Incentive Pay Performance Share Awards Restricted Stock Units Numbers in charts are rounded to the nearest whole number 2025 Pay elements Base salary Annual Incentive Plan (AIP) Long-term equity awards Benefits & other perquisites Benchmarked and set to reward for skills, experience, performance, responsibility, and leadership 100% Performance based: 50% Constant Currency Revenue 30% Adjusted Operating Income 20% Free Cash Flow Individual Goals Modifier 50% Performance Share Units: 50% 3-year Constant Currency Cumulative Revenue Growth 30% 3-year Cumulative Adjusted EPS 20% 3-year rTSR 50% Restricted Stock Units: 3-year vesting period Benchmarked to market practice to help attract, retain and reward talent 44 Compensation discussion and analysis 2025 Performance summary Fiscal year 2025 marked Solventum’s first full year as a public company and a period of meaningful progress.
2026 proxy: 2025 incentive metrics and equity award structure · Filed 27/03/2026
50 Compensation discussion and analysis In 2025, these awards were equally split between PSUs and time-vesting RSUs (“annual PSUs” and “annual RSUs”).
2026 proxy: actual 2025 PSU and RSU award allocation · Filed 27/03/2026
Executive 2025 Base salary ($)1 AIP target (% Base salary)2 Business performance factor Individual performance multiplier Final AIP payout ($) Bryan Hanson 1,350,000 150 1.23 1.20 2,988,900 Wayde McMillan 776,316 98 1.23 1.20 1,118,221 Heather Knight3 113,973 100 1.23 1.00 140,186 Marcela Kirberger 728,724 75 1.23 1.15 773,085 Amy Landucci 684,945 90 1.23 1.15 871,969 Chris Barry4 996,849 100 1.23 1.00 1,226,125 (1)Amounts shown represent adjusted annual base salary rate for the year reflecting any merit-based adjustments or pro-ration for partial year worked, as applicable (2)The AIP Target amount for Mr.
2026 proxy: actual 2025 incentive payouts and individual multipliers · Filed 27/03/2026
On May 21, 2026, the Talent Committee (the “Committee”) of the Board of Directors of Solventum Corporation (the “Company”) adopted and approved the Solventum Executive Severance Plan and Summary Plan Description (the “Severance Plan”), effective June 1, 2026.
May 2026 Form 8-K: adoption and effective date of revised severance plan · Filed 27/05/2026
•The Severance Plan provides for 12 months of base salary plus prorated incentive compensation following an eligible termination for direct reports of the Chief Executive Officer, provided that currently serving executive officers who are eligible to receive 18 months of base salary remain eligible for such amount for a period of two years.
May 2026 Form 8-K: revised severance duration and grandfathered benefits · Filed 27/05/2026
•The Severance Plan provides for forfeiture of certain post‑effective date awards and limited vesting for pre‑effective date awards, in each case subject to applicable plan and award terms.
May 2026 Form 8-K: forfeiture and limited vesting provisions · Filed 27/05/2026
•Transition agreement expenses for the three and six months ended June 30, 2026 were $97 million and $201 million, respectively, and for both the three and six months ended June 30, 2025 were $135 million and $272 million, respectively, and are related to services received under transition agreements between the Company and 3M and its affiliates.
June 2026 Form 10-Q: declining transition agreement expenses · Filed 05/08/2026
The actions under the Solventum Way restructuring program are substantially complete.
June 2026 Form 10-Q: substantially completed restructuring actions · Filed 05/08/2026
Segment and Total Company Net Sales Three months ended June 30, Increase/(Decrease) (Millions) 2026 2025 Reported Growth Currency Impact Constant Currency Other Organic Growth Segment Sales Advanced Wound Care $ 537 $ 467 14.9 % 1.0 % 13.9 % 6.8 % 7.1 % Infection Prevention and Surgical Solutions 836 750 11.3 1.2 10.1 — 10.1 MedSurg 1,372 1,218 12.7 1.1 11.6 2.7 8.9 Dental Solutions 396 338 17.0 1.8 15.2 — 15.2 Health Information Systems 354 339 4.4 0.2 4.2 (1.2) 5.4 Purification and Filtration — 189 NM NM NM NM NM All Other 87 77 11.8 1.2 10.6 — 10.6 Total Company $ 2,209 $ 2,161 2.2 % 1.0 % 1.2 % (8.3) % 9.5 % Six months ended June 30, Increase/(Decrease) (Dollars in millions) 2026 2025 Reported Growth Currency Impact Constant Currency Other Organic Growth Segment Sales Advanced Wound Care $ 1,034 $ 915 12.9 % 1.7 % 11.2 % 6.6 % 4.6 % Infection Prevention and Surgical Solutions 1,573 1,460 7.7 2.2 5.5 — 5.5 MedSurg 2,607 2,375 9.7 2.0 7.7 2.6 5.1 Dental Solutions 750 667 12.5 3.1 9.4 — 9.4 Health Information Systems 696 667 4.3 0.5 3.8 (1.3) 5.1 Purification and Filtration — 369 NM NM NM NM NM All Other 163 153 6.4 1.7 4.7 — 4.7 Total Company $ 4,216 $ 4,231 (0.4) % 1.8 % (2.2) % (8.0) % 5.8 % 28 Table of Contents Segment and Total Company Operating Income Three months ended June 30, (Millions) 2026 2025 2026 vs 2025 change Segment Operating Income MedSurg $ 355 $ 210 68.7 % Dental Solutions 131 96 35.7 Health Information Systems 145 120 20.9 Purification and Filtration — 43 NM All Other 19 8 131.4 Corporate and Unallocated (469) (263) (77.5) Total Company $ 181 $ 214 (15.8) % Six months ended June 30, (Dollars in millions) 2026 2025 2026 vs 2025 change Segment Operating Income MedSurg $ 516 $ 416 23.9 % Dental Solutions 218 175 24.5 Health Information Systems 276 229 20.4 Purification and Filtration — 70 NM All Other 30 19 55.4 Corporate and Unallocated (778) (543) (43.0) Total Company $ 262 $ 367 (28.6) % 29 Table of Contents Net Sales by Geographic Area 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.
June 2026 Form 10-Q: segment organic growth and operating income · Filed 05/08/2026
page 12 Governance highlights Board practices •Independent Board Chair and Board Committees •Independent directors meet regularly without management present •Annual Board and committee self-assessment •Regular review of the company’s risk profile (including cybersecurity, IT, artificial intelligence, geopolitical, human capital management and sustainability) •Other board service limited to four public companies (limit of two for public company CEOs) •Non-employee director retirement at age of 75 Shareholder accountability •Majority vote standard for uncontested director elections •Annual director elections beginning in 2028 •Annual say-on-pay vote •Active shareholder outreach and engagement Other governance practices •Stock ownership guidelines for Section 16 officers and directors •Anti-pledging, anti-hedging, and anti-short selling policies Director skills 10/12 10/12 9/12 11/12 12/12 Healthcare Industry Executive Leadership Financial Acumen & Experience International & Global Operations Strategy & M&A 9/12 7/12 6/12 10/12 9/12 Science, Technology, Research & Innovation Quality, Regulatory & Compliance Corporate Sales, Marketing & Brand Management Risk Management Human Capital Management 8 Proxy statement summary Board at a glance Class II Directors with terms expiring at the 2026 annual meeting Carlos Albán Former Vice Chairman, Chief Commercial Officer, Abbvie Inc.
2026 proxy: board oversight, voting and ownership policies · Filed 27/03/2026
Our Board has determined that a majority of the directors of Solventum, including all of our directors other than our CEO, are independent under the Director Independence Guidelines and the NYSE listing standards for independence.
2026 proxy: actual director independence determination · Filed 27/03/2026
•until the annual stockholder meeting in 2028, Solventum’s Board of Directors will be divided into classes, which could have the effect of making the replacement of incumbent directors more time consuming and difficult;
2025 Form 10-K: classified board through 2028 · Filed 27/02/2026
Proposal Number 2: The shareholders approved, on an advisory basis, the compensation of Solventum’s Named Executive Officers as described in the Proxy Statement.
May 2026 annual meeting results: advisory compensation approval · Filed 20/05/2026
