Solventum (SOLV) Q3 2026 earnings summary

Executive summary

• Q3 sales were $1.949B, down 7.0% reported and 2.8% organically; the $125M ERP-related advance-order reversal created a ~630 bps organic-growth headwind. Organic growth excluding ERP timing was +3.5%.

• Results exceeded expectations; adjusted EPS was $1.45 and FY26 adjusted EPS guidance rose to $7.20–$7.30.

• ERP cutovers are complete and more than 90% of transition service agreements have been exited; separation-cost reductions are expected to strengthen Q4 free cash flow.

• Transformation priorities remain separation, profitable-growth repositioning, and portfolio optimization.

• HIS separation options are under review, with the aim of maximizing shareholder value and supporting long-term growth.

Financial highlights

• Q3 net sales were $1.949B; GAAP net loss was $12M, or $(0.07) per diluted share, versus net income of $1.266B and EPS of $7.22 a year earlier, which included a $1.518B sale gain.

• Adjusted diluted EPS was $1.45, down 3.6% YoY; adjusted operating income was $387M and adjusted operating margin was 19.9%, down 70 bps.

• Gross profit was $1.062B versus $1.135B; adjusted gross margin was 57.1%, up 130 bps YoY, while reported gross margin was 54.5% versus 54.2%.

• Cash from operations was $177M and free cash flow was $97M in Q3; 9M cash from operations was $215M and free cash flow was $(32)M.

• Normalized organic growth was ~4% excluding ERP timing and 90 bps of SKU-rationalization headwinds; Acera growth would have added ~50 bps to total growth.

Outlook and guidance

• FY26 organic sales growth is expected toward the high end of 2.5%–3.0%; excluding ~100 bps of SKU exits, growth is expected toward the high end of 3.5%–4.0%.

• FY26 adjusted EPS guidance increased to $7.20–$7.30 from $7.10–$7.20; the new range includes $0.48 from the Q2 tariff refund.

• FY26 operating margin is expected toward the high end of 22.2%–22.7%, including a 120 bps benefit from the IEEPA tariff refund; excluding the refund, guidance implies 100 bps YoY expansion.

• FY26 free cash flow guidance remains $200M–$300M, with the large majority expected in Q4; underlying FCF is tracking to ~ $1B excluding separation and portfolio costs.

• FY26 effective tax rate guidance is 19.5%–20.5%; FX is expected to benefit net sales by ~100 bps, while IEEPA refunds are expected to offset FY26 tariff costs.