Solventum (SOLV) Q4 2024 earnings summary

Executive summary

• Q4 2024 sales reached $2.1B, up 1.9% reported and 2.3% organic, with adjusted EPS of $1.41 and free cash flow of $92M; full-year sales were $8.254B, adjusted EPS $6.70, and free cash flow $805M.

• Transformation focused on building an independent foundation, driving profitable revenue growth, and progressing through foundation, strategic planning, and portfolio optimization phases.

• Announced divestiture of Purification and Filtration (P&F) business to Thermo Fisher for $3.4B net proceeds, expected to close in 2H 2025, with proceeds primarily for debt paydown and neutral to 2025 EPS.

• Achieved three consecutive quarters of volume growth post-spin, with all segments contributing to organic sales growth.

• FY24 included a transition from carve-out to stand-alone company post-April 1, 2024.

Financial highlights

• Q4 2024 sales were $2.074B (+1.9% reported, +2.3% organic); adjusted operating income was $422M (20.4% margin); adjusted EPS was $1.41; free cash flow was $92M.

• Full-year 2024 sales totaled $8.254B (+0.7% reported, +1.2% organic); adjusted operating income was $1.812B (22.0% margin); adjusted EPS was $6.70; free cash flow was $805M.

• Q4 gross margin was 56.2% adjusted (54.0% GAAP), down 100 bps year-over-year.

• Ended year with $762M in cash and $2.9B in total debt.

• Q4 net income was $30M; full-year net income was $479M.

Outlook and guidance

• 2025 organic sales growth expected at 1.0%–2.0% (1.5%–2.5% normalized, excluding 50 bps SKU exit impact).

• 2025 adjusted EPS guidance is $5.45–$5.65; free cash flow expected at $450M–$550M.

• Operating margin guidance for 2025 is 20%–21%, with margin ramp expected through the year; tax rate 20%–21%.

• Guidance includes P&F segment, which is pending sale; updates to follow post-transaction.

• Q1 2025 expected to be the low point for margins and EPS due to FX and timing of spend.