Solventum (SOLV) Piper Sandler 36th Annual Healthcare Conference summary

Leadership vision and transformation strategy

• Leadership team joined to drive transformation, leveraging prior experience in successful spin-offs and turnarounds.

• Focus on large, attractive markets with mid-single digit growth potential, reducing risk compared to previous transformations.

• Portfolio transformation underway, with ongoing analysis to identify core markets for overinvestment and potential divestitures.

• Emphasis on building a more streamlined, focused organization centered on selected growth drivers.

• Transformation phases mirror prior successes: mission, talent, culture, five-year plan, and portfolio optimization.

Operational challenges and separation from 3M

• Separation from 3M is complex due to deep interconnectivity, especially in intellectual property and manufacturing processes.

• Transition service agreements (TSAs) for systems and services will be phased out over 1–4 years; manufacturing transitions may take 3–4 years.

• Intellectual property and supply continuity projects with 3M are expected to span 10–12 years.

• New commercial and distribution structures established in over 60 countries, causing some disruption, especially outside the U.S.

• Leadership team experienced in managing complex separations, helping to mitigate risks.

Performance improvement and growth initiatives

• Underperformance in all business units despite attractive markets, with low R&D vitality index despite 4–5% revenue spend.

• Four-pronged turnaround: strengthen commercial leadership, restructure sales, accelerate product development, and pursue tuck-in acquisitions.

• W-2 sales organization structure provides leverage for integrating acquisitions and driving growth.

• Focus on building a culture of accountability, decentralized decision-making, and aligning incentives for aggressive sales growth.

• Timeline for transformation expected to be similar to prior successful turnarounds, but with higher internal motivation.