Solventum Corporation(SOLV) - 2025 Q1 - Quarterly Results

Financial Performance - First quarter 2025 net sales increased by 2.6% year-over-year to $2.07 billion, with organic sales growth of 4.3%[5] - Net income for the first quarter decreased by 42.2% to $137 million, with diluted earnings per share dropping to $0.78, a 43.1% decline[5] - Total net sales for the company reached $2,070 million in Q1 2025, up from $2,016 million in Q1 2024, representing a growth of 2.7%[34] - Net income for the three months ended March 31, 2025, was $137 million, a decrease of 42.3% from $237 million in the same period of 2024[31] - Operating income decreased to $152 million in Q1 2025, down 60.1% from $381 million in Q1 2024, resulting in an operating margin of 7.3%[34] - Adjusted diluted earnings per share for the quarter was $1.34, down 35.6% from the previous year[5] - Non-GAAP diluted EPS for Q1 2025 was $1.34, a decrease from $2.08 in Q1 2024[45] Expenses and Costs - Selling, general and administrative expenses rose by 29.0% to $769 million, contributing to a decline in operating income margin to 7.3%[5] - Total operating expenses for Q1 2025 were $962 million, compared to $791 million in Q1 2024[45] - The company incurred restructuring costs of $18 million in Q1 2025, compared to $9 million in Q1 2024[46] - Research and development expenses remained stable at $193 million, a slight decrease of 1.0% compared to the previous year[5] Cash Flow and Assets - Free cash flow for the quarter was negative at $(80) million, a decline of 123.5% compared to the previous year[5] - The company reported a significant decrease in net cash provided by operating activities, which fell by 93.4% to $29 million[5] - Cash and cash equivalents at the end of Q1 2025 were $534 million, down from $762 million at the beginning of the period, indicating a decrease of 29.9%[31] - Total assets increased to $14,527 million as of March 31, 2025, compared to $14,457 million at the end of 2024, reflecting a growth of 0.5%[29] - Total current liabilities decreased to $2,566 million as of March 31, 2025, from $2,703 million at the end of 2024, a reduction of 5.1%[29] Segment Performance - The MedSurg and HIS segments were the primary drivers of organic sales growth during the quarter, with MedSurg showing a 6.0% increase[8] - The MedSurg segment generated net sales of $1,157 million in Q1 2025, an increase of 3.4% from $1,119 million in Q1 2024[34] - Health Information Systems achieved net sales of $329 million, up from $317 million in Q1 2024, marking a growth of 3.8%[34] - The Dental Solutions segment reported net sales of $328 million, a slight decrease of 2.1% from $335 million in Q1 2024[34] - The Purification and Filtration segment's net sales were $242 million, a decrease of 1.2% from $245 million in Q1 2024[34] Guidance and Outlook - The company has increased its full-year organic sales growth outlook by 50 basis points to a range of 1.5% to 2.5%[7] - The company plans to update its annual guidance following the sale of its Purification & Filtration segment announced on February 25, 2025[10] Margins and Tax Rate - Gross margin for Q1 2025 was 53.8%, down from 58.1% in Q1 2024[45] - Non-GAAP operating income for Q1 2025 was $407 million, representing a 19.7% margin, compared to $484 million and a 24.0% margin in Q1 2024[45] - The effective tax rate for Q1 2025 was (262.1)%, compared to 28.0% in Q1 2024[45]