SOLV

Elevance Health (ELV) came out with quarterly earnings of $6.99 per share, beating the Zacks Consensus Estimate of $4.66 per share. This compares to earnings of $6.03 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +50.00%. A quarter ago, it was expected that this health insurer would post earnings of $6.18 per share when it actually produced earnings of $7.45, delivering a surprise of +20.55%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Elevance Health, which belongs to the Zacks Medical Services industry, posted revenues of $50.44 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 4.01%. This compares to year-ago revenues of $50.09 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Elevance Health shares have added about 22.7% since the beginning of the year versus the S&P 500's gain of 12.4%. While Elevance Health has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Elevance Health was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.49 on $47.54 billion in revenues for the coming quarter and $27.20 on $195.52 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical Services is currently in the bottom 34% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Solventum (SOLV), is yet to report results for the quarter ended September 2026. The results are expected to be released on November 5. This health care company is expected to post quarterly earnings of $1.35 per share in its upcoming report, which represents a year-over-year change of -10%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Solventum's revenues are expected to be $1.94 billion, down 7.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Elevance Health, Inc. (ELV) : Free Stock Analysis Report Solventum Corporation (SOLV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider Solventum (SOLV). This company, which is in the Zacks Medical Services industry, shows potential for another earnings beat. When looking at the last two reports, this health care company has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 21.57%, on average, in the last two quarters. For the last reported quarter, Solventum came out with earnings of $2.55 per share versus the Zacks Consensus Estimate of $1.91 per share, representing a surprise of 33.51%. For the previous quarter, the company was expected to post earnings of $1.35 per share and it actually produced earnings of $1.48 per share, delivering a surprise of 9.63%. With this earnings history in mind, recent estimates have been moving higher for Solventum. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign of an earnings beat, especially when you combine this metric with its nice Zacks Rank. Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Solventum has an Earnings ESP of +2.81% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock's Zacks Rank #3 (Hold), it shows that another beat is possibly around the corner. With the Earnings ESP metric, it's important to note that a negative value reduces its predictive power; however, a negative Earnings ESP does not indicate an earnings miss. Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate. Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Solventum Corporation (SOLV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Earlier this quarter, Solventum reported results that surpassed analyst expectations, with both organic revenue and EPS beating estimates and management emphasizing strong execution and ongoing transformation efforts. An interesting angle is how Solventum’s exposure to surgical equipment and consumables, including AI and robotics-enabled solutions, supports relatively consistent procedural demand and innovation-driven opportunities. Now we’ll explore how this stronger-than-expected quarter, underpinned by solid execution, could influence Solventum’s existing investment narrative. AI is about to change healthcare. These 39 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. To own Solventum, you likely need to believe that its mix of surgical equipment, consumables and health information solutions can deliver resilient demand while management executes a complex transformation. The latest revenue and EPS beat supports confidence in near term execution, but it does not eliminate key risks around separation from 3M, ERP rollout and the potential unwinding of order timing benefits that could still weigh on reported growth. Among recent developments, the ongoing share repurchase program stands out next to this strong quarter, with roughly US$354.8 million spent to retire about 2.8 percent of shares so far. For investors, this capital return sits alongside tuck in M&A ambitions and the planned Health Information Systems separation as potential catalysts that could either amplify the impact of better execution or magnify the effects of any missteps. Yet beneath the strong quarter, investors should still pay attention to how ERP implementation and separation risks could affect... Read the full narrative on Solventum (it's free!) Solventum's narrative projects $9.0 billion revenue and $882.5 million earnings by 2029. This requires 2.7% yearly revenue growth and an earnings decrease of about $0.5 billion from $1.4 billion today. Uncover how Solventum's forecasts yield a $93.15 fair value, a 5% upside to its current price. Some of the lowest analysts expected earnings to fall toward about US$452.9 million by 2029, so compared with their caution on ERP and separation risks, this quarter’s beat could eventually reshape those expectations, and you may want to compare that more pessimistic path with your own view. Explore 3 other fair value estimates on Solventum - why the stock might be worth just $93.15! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Solventum research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision. Our free Solventum research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Solventum's overall financial health at a glance. Right now could be the best entry point. These picks are fresh from our daily scans. Don't delay: Invest in the nuclear renaissance through our list of 91 elite nuclear energy infrastructure plays powering the global AI revolution. Rare earth metals are the new gold rush. Find out which 28 stocks are leading the charge. The future of work is here. Discover the 38 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SOLV. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at surgical equipment & consumables - diversified stocks, starting with Solventum (NYSE:SOLV). The surgical equipment and consumables industry provides tools, devices, and disposable products essential for surgeries and medical procedures. These companies therefore benefit from relatively consistent demand, driven by the ongoing need for medical interventions, recurring revenue from consumables, and long-term contracts with hospitals and healthcare providers. However, the high costs of R&D and regulatory compliance, coupled with intense competition and pricing pressures from cost-conscious customers, can constrain profitability. Over the next few years, tailwinds include aging populations, which tend to need surgical interventions at higher rates. The increasing integration of AI and robotics into surgical procedures could also create opportunities for differentiation and innovation. However, the industry faces headwinds including potential supply chain vulnerabilities, evolving regulatory requirements, and more widespread efforts to make healthcare less costly. The 5 surgical equipment & consumables - diversified stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.6%. In light of this news, share prices of the companies have held steady as they are up 2.4% on average since the latest earnings results. Founded in 1985, Solventum (NYSE:SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs. Solventum reported revenues of $2.21 billion, up 2.2% year on year. This print exceeded analysts’ expectations by 2.5%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates. "The Solventum team delivered another quarter of strong execution with results ahead of our expectations while continuing to advance our transformation," said Bryan Hanson, chief executive officer of Solventum. Solventum pulled off the biggest analyst estimate beat in the group. Unsurprisingly, the stock is up 3% since reporting and currently trades at $90.09. Is now the time to buy Solventum? Access our full analysis of the earnings results here, it’s free. With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE:CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products. CONMED reported revenues of $343.5 million, flat year on year, outperforming analysts’ expectations by 1.8%. The business had a very strong quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ full-year EPS guidance estimates. The market seems happy with the results as the stock is up 8.4% since reporting. It currently trades at $46.83. Is now the time to buy CONMED? Access our full analysis of the earnings results here, it’s free. With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE:STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments. STERIS reported revenues of $1.49 billion, up 7.3% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a beat of analysts’ EPS estimates. STERIS delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 9.6% since the results and currently trades at $210.31. Read our full analysis of STERIS’s results here. With a history dating back to 1927 and a presence in over 100 countries worldwide, Zimmer Biomet (NYSE:ZBH) designs and manufactures orthopedic products including knee and hip replacements, surgical tools, and robotic technologies for joint reconstruction and spine surgeries. Zimmer Biomet reported revenues of $2.18 billion, up 4.8% year on year. This number topped analysts’ expectations by 2%. Overall, it was a strong quarter as it also logged a narrow beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates. The stock is up 1.5% since reporting and currently trades at $97.23. Read our full, actionable report on Zimmer Biomet here, it’s free. With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE:BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide. BD reported revenues of $4.98 billion, up 5.4% year on year. This result surpassed analysts’ expectations by 2%. It was a strong quarter as it also put up a narrow beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates. The stock is up 8.8% since reporting and currently trades at $185.71. Read our full, actionable report on BD here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

It has been about a month since the last earnings report for Solventum (SOLV). Shares have added about 11.4% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Solventum due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Solventum Corporation before we dive into how investors and analysts have reacted as of late. Solventum reported second-quarter 2026 adjusted earnings per share of $2.55, which beat the Zacks Consensus Estimate of $1.91 by 33.5%. The bottom line improved 50.9% year over year. GAAP earnings per share in the quarter was 53 cents compared with 51 cents in the year-ago quarter. Revenues of $2.21 billion rose 2.2% and surpassed the consensus mark of $2.17 billion by 2%. Organic sales increased 9.5%, aided by strong performance across all reportable segments, primarily driven by volume and product mix and including the expected benefit of advance orders placed ahead of ERP cutovers. Reported growth included a 100-basis-point currency benefit and an 830-basis-point headwind from acquisitions and divestitures. The latter mainly reflected the September 2025 sale of the Purification and Filtration business, partly offset by the Acera acquisition. Management estimated normalized organic growth of about 4%. This adjusts for roughly 630 basis points of ERP-related advance orders, partly offset by about 100 basis points of SKU rationalization headwinds and a partial separation-timing benefit. MedSurg revenues totaled $1.37 billion, up 12.7% on a reported basis and 8.9% organically. ERP advance orders added an estimated 700 basis points to organic growth. Advanced Wound Care sales rose 14.9% year over year to $537 million, with organic growth of 7.1%. Infection Prevention and Surgical Solutions revenues increased 11.3% year over year to $836 million, while organic sales advanced 10.1% on higher adoption of antimicrobial IV-site management products. Acera contributed $32 million and recorded 48% growth. Dental Solutions revenues climbed 17% year over year to $396 million, while organic sales rose 15.2%. Advance ordering contributed about 10 percentage points, while new products supported underlying demand in restoratives and aesthetics. Health Information Systems revenues increased 4.4% year over year to $354 million, with organic growth of 5.4%. Revenue cycle management solutions benefited from healthy customer retention and commercial execution. SOLV also announced its intent to separate Health Information Systems (HIS) to sharpen its MedTech focus and give the software business greater strategic flexibility. Adjusted gross profit totaled $1.33 billion, up 9.8% year over year. As a percentage of revenues, the adjusted gross margin expanded 410 basis points to 60.1% from 56% in the prior-year quarter. Selling, general and administrative expenses totaled $927 million, up 20.1% year over year, mainly due to higher separation-related and net legal costs. Research and development expenses declined 5.8% year over year to $178 million. Adjusted operating expenses totaled $701 million, down 4.8% from the year-ago quarter. Adjusted operating income increased 32.3% year over year to $627 million. The adjusted operating margin expanded 650 basis points to 28.4%, primarily driven by the tariff refund and ERP-related advance-order timing benefits. Excluding these items, management estimated the adjusted operating margin at approximately 21.7%. Solventum exited the second quarter with cash, cash equivalents and investments of $403 million compared with $561 million in the previous quarter. Total assets increased to $14.2 billion from $14.1 billion in the previous quarter. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $38 million compared with $198 million in the year-ago period. Solventum raised the lower end of its 2026 organic sales growth guidance. The company now expects sales to grow by 2.5-3% compared with the earlier guidance of 2-3%. Excluding an expected 100-basis-point SKU exit impact, the company now projects growth of 3.5-4%. Adjusted earnings guidance increased to $7.10-$7.20 per share from the prior range of $6.40-$6.60. Free cash flow is now expected to be between $200 million and $300 million compared with the earlier estimate of about $200 million. Since the earnings release, investors have witnessed a downward trend in estimates review. At this time, Solventum has a average Growth Score of C, a score with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the top 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Solventum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Solventum is part of the Zacks Medical Services industry. Over the past month, Avantor, Inc. (AVTR), a stock from the same industry, has gained 15.3%. The company reported its results for the quarter ended June 2026 more than a month ago. Avantor reported revenues of $1.69 billion in the last reported quarter, representing a year-over-year change of +0.5%. EPS of $0.21 for the same period compares with $0.24 a year ago. For the current quarter, Avantor is expected to post earnings of $0.21 per share, indicating a change of -4.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days. Avantor has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Solventum Corporation (SOLV) : Free Stock Analysis Report Avantor, Inc. (AVTR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 4:30 p.m. ET Senior Vice President of Investor Relations and Finance Communications - Amy Wakeham Chief Executive Officer - Bryan Hanson Chief Financial Officer - Wayde McMillan Operator: Good afternoon, and welcome to Solventum's Second Quarter 2026 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Amy Wakeham, Senior Vice President of Investor Relations and Finance Communications. Please proceed. Amy Wakeham: Thank you. Good afternoon, and welcome to Solventum's Second Quarter Fiscal Year 2026 Earnings Call. Joining me on today's call are our Chief Executive Officer, Bryan Hanson; and Chief Financial Officer, Wayde McMillan. A replay of today's earnings call will be available later today on the Investor Relations section of our corporate website. The earnings press release and the presentation are both available there now. During today's call, our discussion and any comments we make will be on a non-GAAP basis unless they are specifically called out as GAAP. The non-GAAP information discussed is not intended to be considered in isolation or as a substitute for the reported GAAP financial information. Please review the supporting schedules in today's earnings press release to reconcile the non-GAAP measures with the GAAP reported numbers. Our discussion on today's call will include forward-looking statements, including, but not limited to, expectations about our future financial and operating performance. These statements are based on reasonable assumptions. However, our actual results could differ. Please review our SEC filings for a complete discussion of the risk factors that could cause our actual results to differ materially from any forward-looking statements made today. Following our prepared remarks, we'll hold a Q&A session. I'd like to now hand the call over to Bryan. Bryan Hanson: All right. Thanks, Amy, and thanks to everyone joining us today. Before we get into the quarter, I want to talk directly to our team for just a minute. I know the work right now isn't easy. With the transformation work, the ERP cutovers and everything else we have in flight, it's a lot. And through all of it, you keep showing up, you stay focused and you deliver for our customers. And honestly, that's everything. So thank you. Thank you for making it happen. And speaking of making it happen, let's get into the quarter. The quarter came in ahead of plan, top and bottom line. Organic growth and EPS were both ahead of expectations and that comes down to the strong execution and the momentum this team keeps building. We saw healthy performance across every segment, led by our specialized commercial teams and new product innovation and operating margins also came in better than expected. That's the discipline we built into how we run this business showing up in the numbers. And just as we communicated last quarter, these results include the advanced orders we planned for the North America ERP cutover. We also put the balance sheet to work. During the quarter, we accelerated our $1 billion share repurchase program right in line with our balanced capital allocation strategy. So here's the bottom line on the quarter. We delivered across the board. We're clearly on track to achieving our long-range plan earlier than expected. And importantly, we did what we said, again, and that say-do equation really matters to us. And as strong as the quarter was, I'm just as encouraged by the progress on our transformation. And as a quick reminder, our transformation has 3 phases: stabilize and separate the business, reposition it for profitable growth and optimize the portfolio. And importantly, as we've said from the beginning, these phases are not sequential. They're running concurrently. Different initiatives are progressing at different speeds, but all 3 phases continue to move forward and increasingly reinforce one another. Let me start with the separation from 3M because we're now in the final steps. The final phases of our ERP cutover are already in motion. And getting to the other side of this, it's a big deal. It removes a significant amount of complexity from the business. It frees up talent and resources for innovation and margin expansion and it meaningfully improves free cash flow. Just put simply, we're very close to moving from an environment with separation distraction to full operating mode. Now let's talk portfolio optimization because we took another major step today. As we just announced, we're advancing the separation of our Health Information Systems business with a clear objective, pursuing the path that maximizes value. And let me walk you through the thinking because we obviously didn't arrive here casually. First, strategic fit. We believe HIS can create greater value outside of Solventum, either as an independent company or combined with a scale player in the space. It's a differentiated, trusted business with a highly resilient financial profile. And in a rapidly changing environment, this will better position it to capitalize on the fast-moving advances in AI. The second is value. We're confident a separation can unlock shareholder value and our intent is to leverage both the separation method and the use of proceeds to maximize that value. And third is focus. For Solventum, this will make us a more dedicated MedTech company, and it will sharpen our focus on MedSurg and Dental. And timing here matters. In April, as you probably remember, we passed the second anniversary of our spin. That gives us additional flexibility to evaluate and pursue more significant portfolio actions just like this one. And to support this next chapter, we're planning to host our third Annual Investor Day in Q1 next year. That's where we're going to lay out the post-HIS long-range plan and provide updates on our RemainCo strategy and innovation pipeline. Just two commitments before I move on. To our HIS team, you should be incredibly proud of what you've built over decades. And to be clear, you are part of the Solventum family until a transaction is finalized. You have my commitment and this leadership team's commitment that we will fully support you through this process. And to our HIS customers, nothing changes. We'll maintain our investment strategy in this business. We'll keep supporting your operations, and we will absolutely keep executing the innovation road map. Okay. Now moving to the M&A side of portfolio optimization. Acera, which, as you probably remember, is our first acquisition, continues to perform extremely well with year-over-year revenue growth above 40% and gross margin above 80%. And that's the M&A playbook, a differentiated technology in a space we know accelerated through customer relationships we already have, and we intend to keep running that tuck-in acquisition playbook in a disciplined way. But portfolio moves are only part of the story. The engine here is organic growth, and that's why we chose our 5 growth drivers with intention, durable markets, attractive growth and margin profiles and in spaces where we lead with differentiated solutions. And as a result, we see a multibillion-dollar growth opportunity in front of us and a big portion of it sits inside customers we already serve, where our preferred and differentiated solutions are still underpenetrated. And that's what gives us confidence that over time, we can sustainably deliver growth at or above our long-range plan. What makes this opportunity especially meaningful is that it goes beyond just market growth. In many cases, growth comes from helping to address challenges the health care systems and patients face every day. So basically, as adoption of our solutions expands, we create shareholder value for sure, but we're also helping improve outcomes for the patients that we serve. And let me just make that real with one example of our growth drivers, IV site management. IV-related infections impact an estimated 2 million to 3 million patients every year. They can increase mortality risk by 50%, and they create roughly $10 billion in health care costs in the U.S. alone. And for cancer patients with central lines, the stakes are even higher. Roughly 20% of those bloodstream infections are fatal. For patients already fighting cancer, preventable infection should never be the thing that takes their life, and that's where our products can help. Tegaderm CHG is the only transparent dressing cleared by the FDA to reduce catheter-related bloodstream infections. Studies show nearly 60% lower infection rates versus non-CHG solutions, and yet it's used less than 20% of the time. Think about that, a clinically differentiated solution, a potentially life or death problem and over 80% of the opportunity is still in front of us. That's just one example of the kind of upgrade opportunities that exist across the majority of our growth driver markets. Of course, attractive markets aren't enough. You need innovation and commercial focus, and that's where we've made real progress. Our innovation and commercial teams are now aligned around these growth drivers, and our new products are showing up in the results. As an example, in MedSurg, innovation is focused on 3 of our 5 growth drivers: IV site management, which I just talked about; negative pressure wound therapy and sterilization assurance and recent launches, including our V.A.C. Peel and Place dressing, 3 new Attest sterilization products and our global expansion of Tegaderm CHG are driving conversions to these higher-value solutions. In Dental, innovation is focused on our core restorative growth driver and a shift towards higher-growth aesthetics. Products like ClinPro Clear, Filtek Easy Match and Easy Match Flowable, our composite warmer and our Clarity aligner attachments are all gaining momentum with our customers. And in HIS, innovation remains focused on revenue cycle management, including new AI-driven autonomous coding and our international expansion efforts. Across all 3 segments, our specialized sales teams are accelerating adoption in these markets. And looking ahead, our vitality index improvements are working. The pipeline is strong. We're expecting to launch almost 20 new products through the first quarter of 2028. That includes meaningful MedSurg launches in the first half of 2027, particularly in Advanced Wound Care. We also have some exciting dental innovations in aesthetics starting later this year and a continual stream of market-leading autonomous coding applications in HIS. So when I take a step back, I see the transformation doing exactly what we designed it to do. The separation is nearly complete. The portfolio is getting more focused. The growth driver strategy is gaining traction, and our commercial structure and innovation is translating into performance. Okay. I've thrown a lot at you, so I just want to give you 4 key takeaways. First one, we delivered another quarter exceeding our expectations, including executing the ERP advanced order plan that we laid out in May. The key takeaway here is even in a complex environment, the say-do equation continues. Number two, we're nearing the end of the 3M separation journey. That takes risk off the table, improves free cash flow and lets us put our full energy into growth and margin expansion. Three, we're continuing to advance portfolio optimization through the separation of HIS, creating a greater focus for both HIS and Solventum, and we're confident this will unlock shareholder value with a full commitment to our HIS team and customers along the way. And four, our 5 growth driver catalysts represent a multibillion-dollar opportunity, much of it inside customers we already serve. And our commercial structure and innovation engine are increasingly converting that opportunity into results. Said simply, we're building a more focused, a more disciplined company, one that is well positioned to deliver sustainable growth, margin expansion and shareholder value. And with that, I'm going to turn it over to Wayde. Okay. Wayde, go ahead. Wayde McMillan: Thanks, Bryan. We delivered another solid quarter in Q2 with continued momentum across the business. Our commercial and operational performance continues to improve, and we made additional progress across our separation and portfolio activities, all while navigating our largest ERP cutover to date. Collectively, this increases our confidence in our 2026 outlook and acceleration towards achieving our long-range plan earlier than expected. As usual, I'll begin with an update on our 3M separation progress and portfolio actions, then walk through our second quarter financial performance and conclude with our outlook for the remainder of 2026. Our separation from 3M remains on track, and we're nearing completion of full separation. Inclusive of the ERP cutover activity since June, we have now exited nearly 70% of our approximately 200 transition service agreements, keeping us on pace to exit 90% by the end of 2026. We have migrated approximately 950 of 1,200 systems, including the majority of our ERP implementations and all of the Solventum site conversions. Our supply chain footprint remained consistent in the quarter with the majority of work focused on settling prior changes and planning for the ERP implementations. Global supply chain remains a critical work stream to establish a more efficient operating model while positioning us to capture the benefits of our longer-term transformation plans. Regarding portfolio actions, purification and filtration divestiture activities continue to progress according to plan, including the transition-related work streams supporting separation of the business. Our integration activities related to the Acera acquisition remain on track with several key system conversions already complete. The business continues to accelerate sales and exceed our expectations. As Bryan discussed earlier, we are moving forward with separating our Health Information Systems business. We expect the greater focus on MedSurg and Dental will unlock shareholder value as a pure-play MedTech company. We'll provide updates at a future date as appropriate. Now turning to our second quarter results. Starting with top line performance. Sales of $2.2 billion increased 9.5% on an organic basis compared to the prior year and 2.2% on a reported basis. Foreign currency was a 100 basis point benefit to reported growth, while the net impact of acquisitions and divestitures was an 830 basis point headwind, primarily driven by the sale of Purification and Filtration and partially offset by the Acera acquisition. Growth in the quarter was driven primarily by volume, including ERP advanced orders of approximately $125 million, while pricing remained within the expected range of plus or minus 1%. As we shared last quarter, we are managing through planned temporary advanced ordering as a mitigation to the ERP cutovers, which will mostly reverse in Q3. Q2 organic growth on a normalized basis was approximately 4% when taking into consideration approximately 630 basis points of ERP advanced orders, partially offset by approximately 100 basis points of our SKU rationalization plan headwinds and the partial separation timing benefit shared in Q1, mostly impacting the MedSurg business. Acera growth contribution is not yet included in our organic growth and would have added approximately 40 basis points to total growth and 70 basis points to MedSurg. Now moving to the segments. MedSurg delivered $1.4 billion in sales, an increase of 8.9% on an organic basis. ERP advanced orders represented approximately 700 basis points contribution in the quarter with the majority in the Infection Prevention and Surgical Solutions business. Within MedSurg, Advanced Wound Care grew 7.1% organically with continued benefit from performance and negative pressure wound therapy and a benefit from advanced orders. Acera contributed $32 million to reported sales. The business grew 48%, driven by its innovative synthetic tissue matrix technology and continues to outpace this attractive double-digit growth market. Infection Prevention and Surgical Solutions delivered organic growth of 10.1%, driven primarily by advanced orders and expanding adoption of antimicrobial solutions within our IV site management growth driver. Our Dental Solutions segment delivered $396 million in sales, representing organic growth of 15.2%. ERP advanced orders contributed approximately 10 percentage points in the quarter. Underlying performance continued to benefit from innovative new product launches. Health Information Systems delivered $354 million in sales, representing organic growth of 5.4%. Growth was driven by continued strength in revenue cycle management solutions, supported by healthy customer retention and ongoing commercial execution. Now moving down to P&L. Gross margins were 60.1%, an increase of 410 basis points compared with 56% in the prior year. The performance includes a onetime tariff refund benefit of $100 million. Excluding the refund, our gross margins were approximately 55.6%, consistent with our expectations and 40 basis points lower compared to prior year, driven by tariff impact of 150 basis points and inflation headwinds, partially offset by programmatic savings and portfolio optimization. Operating expenses were $701 million, the $35 million reduction versus the prior year reflects portfolio moves along with benefits from cost discipline and our savings initiatives outpacing ongoing investments to support our growth initiatives and the business. In total, we delivered operating income of $627 million or an operating margin of 28.4%. Removing the approximate 670 basis point benefit of advanced order sales timing and tariff refund, operating margins would have been approximately 21.7%, just above the high end of our initial full year outlook. This compares to 21.9% in the prior year with the year-over-year 20 basis points decline driven by 150 basis points of tariff headwinds, mostly offset by ramping Transform for the Future savings. Below operating income, nonoperating expense was $73 million, and our effective tax rate was 20.2%, both consistent with our full year expectations. Altogether, we delivered earnings per share of $2.55. This includes a $0.34 contribution from the advanced orders and $0.48 benefit of expected tariff refunds. Excluding both, we estimate earnings per share would have been $1.73, ahead of our expectations. Of note, we've recorded certain litigation costs of $157 million related to $204 million of estimated legal charges, net of $55 million related to insurance proceeds received to date that is included in our GAAP to non-GAAP supplemental schedule in the press release and excluded from our non-GAAP operating income and earnings per share. Turning to the balance sheet. We ended the quarter with $403 million in cash and equivalents and net debt of $4.7 billion. From a free cash flow perspective, we generated $144 million in the quarter, which was above our expectations due primarily to timing of tax payments and insurance proceeds. As we've discussed on prior calls, separation-related activities continue to create temporary demands on cash flow during 2026. Despite these headwinds, underlying cash generation year-to-date is ahead of our expectations, and we continue to expect meaningful improvement as separation-related costs decline beginning in Q4. During the quarter, we repurchased nearly 4 million shares for total consideration of $288 million under our authorized share repurchase program. This brings combined repurchases in the first 2 quarters to 4.8 million shares for a total purchase of $355 million. Our balance sheet remains well positioned to support our balanced capital allocation strategy, including tuck-in acquisitions and share repurchases. Turning to our 2026 outlook. We are tightening our organic sales growth range to the upper half of our initial 2% to 3% guidance range, raising our organic sales growth range to 2.5% to 3%. Excluding the expected 100 basis points impact of SKU exits this year, this now represents 3.5% to 4% growth. We continue to estimate currency will have a favorable impact of approximately 100 basis points on sales growth for the full year. Our outlook for operating margin is increasing to a range of 22.2% to 22.7%, an increase versus our prior 21% to 21.5%, which reflects the entire expected tariff refund benefit of approximately 120 basis points. Our expectation for annual nonoperating expenses of approximately $300 million and a tax rate in the range of 19.5% to 20.5% are both unchanged. Tariffs are now expected to have a neutral impact versus our prior estimate of $100 million to $120 million, given the tariff refund we recognized in Q2. Given our continued solid performance through the first half of the year and confidence in executing for the remainder of the year, along with the tariff refund, we are raising our earnings per share guide to $7.10 to $7.20 versus our prior range of $6.40 to $6.60. We now estimate free cash flow will be in a range of $200 million to $300 million versus our prior estimate of approximately $200 million, with the change reflecting the expected benefit of tariff refunds at the high end. The large majority of our free cash flow is still expected in Q4, consistent with timing of winding down separation charges. Regarding the third quarter, we expect the Q2 $125 million advanced order sales timing benefit and $0.34 contribution to earnings per share will mostly reverse in Q3. And as a quick reminder, our full year 2026 outlook includes the Health Information Systems segment. We'll update you on the financial impact of the expected separation at a future date. In summary, we delivered another quarter of solid business execution as we manage through very complex separation, transformation and several portfolio initiatives. As we shared previously, we are accelerating towards achieving our long-range plan targets earlier than expected with the high end of our new SKU sales growth and operating margin guidance already at or near the LRP ranges. Our execution to date on key priorities reinforces our confidence in our full year objectives and our longer-term financial commitments. We are making great progress on our 3-phase transformation and plans for shareholder value creation while serving our mission to enable better, smarter, safer health care to improve lives. With that, we'll turn it back to the operator for the Q&A portion of the call. Operator: And your first question comes from the line of Jason Bednar with Piper Sandler. Jason Bednar: Congrats on all the progress here team. I wanted to start with the HIS announcement this afternoon. A few questions. I'm just going to pack them all in here. Have you received any outside interest in the asset that helped spur this decision? Maybe talk about how far along you are just in this process and the kind of the separation decision. And then I'm interested just in the release, you're framing the decision is transitioning to a stronger growth profile, but maybe elaborate on that since HIS has been growing above the corporate average over the last several years. Bryan Hanson: Great. I just want to make sure on that last question, Jason, and it's funny, Wayde and I are kind of laughing across the desk because we were questioning whether HIS would be the first one or not. And then we were trying to say what would the sub-question be, you did most of them. On that last question, though, can you just provide context? I just want to make sure I got that right. Jason Bednar: Sure. Yes. In the -- and sorry, I have it up in front of me, but in the release, there was a reference to transitioning the business to a stronger growth profile, positioning it for a stronger growth profile. And I'm trying to understand that just in the context of HIS running at a growth rate that's been above the corporate average over the last several years that we have the financial data for? Bryan Hanson: I got you. Yes, that makes sense. I appreciate it. I was thinking about where you saw that. That's really one of the primary reasons why we're looking at this as being able to unlock value. We do have a really strong performing business and particularly now. I mean the performance of the business has gone up since we took charge of it for sure. But we see significant opportunity. Just think about it. If you think about autonomous coding, as a revolution, if you will, inside of revenue cycle management. It is just beginning. There is no question about that. But to be able to truly maximize it, we're going to have to see a different investment level. We're going to have to see a different pace of innovation. And we truly do believe that this asset on its own or with a scaled player that's in the HIT space, we'll be able to get after that faster than we will. So we love the performance of the business, and it's doing a great job inside of our organization, growing fast, great margins. But we know that there's more value to unlock here if it was on its own again or with an HIT player. And for us, we see it as a benefit to be a dedicated MedTech company that's going to be focusing on the businesses that we have that are MedTech related. So it's not an easy decision, as you can imagine, because it's an attractive asset, but we definitely see more opportunity with it being separate from us. Relative to how long we are in the process, we're earlier in the process. We've gone through the analysis to determine whether we should keep or not. We're obviously looking to separate. There are a number of reasons why we're early in the process. But one of the big ones is just that from a timing standpoint, we really couldn't look at this as an asset to remove because we had some barriers associated with where we were in the spin process. So when those are out of the way and we're seeing the market change in the way that it is, and we see this opportunity, we want to lean into moving this forward. Relative to are we getting any inbound offers or any inbound approaches, we've been getting that for a while. So that's not new. Certainly, now, I think it's going to increase as a result of making this public. But there's no question in our mind that there's going to be a pretty large field of interested parties in this asset. Again, it's an attractive asset. Jason Bednar: Yes, totally agree. I appreciate all that, Bryan. Maybe just to follow up a little bit. And I know you're super early, but are you agnostic as far as the transaction form, assuming when one occurs, how that takes place? And maybe walk through some of the considerations that you have with respect to speed of transaction and the value considerations when we think about like tax leakage or just overall value on a spin versus a sale? And maybe the final thing of just remind us how integrated HIS is into Solventum. I don't think it's highly integrated, but maybe refresh us there. Bryan Hanson: Yes. Again, all great questions. I'll start maybe with the second one and then go back to the first one. It's not highly integrated. And it's intentional, and it's purposeful. I mean it is a very different business from a business model standpoint than the rest of our businesses and to try to integrate it just wouldn't make sense. There's not a lot of synergies that you could grab between the businesses. So we have left it very separate. And remember, it's not a manufacturing footprint. So from an ease of separation, this is about as easy as you're going to get now. No separation is easy. I don't want to diminish the work that's going to be in front of us. But on a relative basis, because it's not a manufacturing footprint, and we don't have those synergies that drew those connection points, it will be easier than most. When I think about the -- how agnostic we are in the separation process, that was what I was trying to get across in the prepared remarks. We are open to the separation process or method as well as if there are proceeds that are involved, which certainly, if there was a certain separation method, there would be proceeds. We would look to use both of those to be able to maximize shareholder value, so we want to leave our options open. As I said before, I think we're going to have a lot of interested parties to buy this asset, but we also see a spin as being a very reasonable path to move down. And we believe both of those potential methods could drive shareholder value. Our goal is just to maximize that value. Operator: Your next question comes from the line of Ryan Zimmerman with U.S. Bancorp. Ryan Zimmerman: Congrats on all the progress as well. When you back out the advanced orders, we saw a nice acceleration in the underlying businesses in MedSurg and Dental. Bryan, I wonder if you could kind of speak to the health of the market, what you're seeing, again, ex the advanced orders because I think, again, if you look at the report thus far this season, there's been obviously questions about utilization and so forth. And I think you can shed some light on that just based on your performance. Bryan Hanson: Yes. We appreciate it. We're paying a lot of attention to what we're hearing out there. There's no question that there's been a lot of noise. And there's been conflicting information that some people are saying that they're seeing that demand wane and others are saying they're not seeing it at all. And we're in that camp. We're not actually seeing right now, at least at this point, any softness in the procedures or the momentum of our business. So we feel pretty good about the environment. And I'm not just talking about MedSurg or Dental, I'm talking about HIS as well. Right now, it feels pretty good. So we're clearly not discounting what we're hearing, but we're not feeling it right now. Ryan Zimmerman: Understood. The other question, I mean, the cash flow is picking up. You obviously got a share buyback going on. Let's say, the HIS business gets done in some fashion, you're going to have certainly more cash proceeds or cash on the balance sheet. And Wayde, I'm curious kind of how you think about putting that to work? I mean whether that's more rapid debt pay down, whether that opens up the aperture in terms of M&A size. Just help us understand kind of the capital strategy and maybe I'm getting a little ahead of myself for this Q1 Investor Day next year, but I want to get your thoughts on it today. Bryan Hanson: I'm just curious, you don't think I can answer that question? Ryan Zimmerman: Sorry, Bryan, you feel free to take a swing at it, too. Bryan Hanson: Let me take a shot and then Wayde will correct me when I say it wrong, but -- so what I would say, first of all, the assumption that you're making is that there's proceeds. So that's an assumption of a certain separation process. And then obviously, if there was that direction, it would be significant proceeds. And I would almost kind of bifurcate that. If you look at typical capital allocation, we're going to be looking at a very balanced plan. I think you're seeing that with the acquisition of Acera. You saw that with the $1 billion repurchase signal that we gave, and we're acting on it. But in this particular situation with these proceeds coming in, we would be more biased to applying those dollars to more direct shareholder application -- shareholder return applications. And here's the good news. From a separation standpoint, in HIS, we're in a very different place than we were when we were separating from Purification and Filtration, right? We had a very different leverage ratio back then. So any proceeds that would come in now, obviously, some portion of those will have to go down to buy down debt. So we don't hurt our leverage ratio. But the majority of proceeds can again be applied to those things that can drive shareholder value, and that's what we're going to be concentrating on. Wayde McMillan: Bryan, that was perfect. I think the only thing I would round off there is just to highlight that we're very happy with our solid investment-grade ratings today. And so I think whether we -- however we transact HIS and move forward in the future, we're looking at solid investment-grade ratings. And then the only thing I'd add is on the organic side of your question, I think Bryan covered really well. The HIS side of it is in this balance plan that we're in, we're not looking to change our acquisition strategy. It would still be a tuck-in acquisition strategy, obviously, we're very happy with the Acera acquisition to date. Our teams are focused on building a queue of future opportunities for us, and building a pretty exciting pipeline for us actually. So we're looking forward to do additional tuck-in acquisitions in the future. but we would not be looking to do anything larger scale than that. We've got a playbook here. We're excited about building momentum in the business. You mentioned generating free cash flow in the future, something else we can't wait to get to. This is a very strong cash-generating business. We just have to get through all the separation divestiture costs that we're dealing with right now. So we're pretty excited on all those fronts. Bryan Hanson: It's good thing we have a combo there. That was one of the key messages we wanted to get out and I forgot it, that we're not going to be shifting to a large transaction as a result of proceeds when they come or if they come. So thank you, Wayde, for catching that. Operator: Your next question comes from the line of Travis Steed with Bank of America. Travis Steed: Maybe a little bit of a follow-up to the last one. I guess, first, the health care IT business is a pretty high-margin business. And so how are you thinking about managing the EPS dilution if that is sold? Is there a willingness to buy back stock so you can kind of protect earnings there? And then I don't know if you could comment on why announce the intent to separate versus just announcing when something is done? And how you think about the business kind of post the separation, MedSurg, Dental, kind of both medtech, but it's 2 completely different call points. So just curious what happens in that situation over time. Bryan Hanson: Yes. Okay. Let me -- I just don't want to forget that third one is around Dental and MedSurg. So let me start with the EPS dilution question that you referenced, and I would just reiterate, it is a very profitable business. There's no question. But the EPS dilution is, as you obviously know, pretty dependent on the method of separation. And also, as we just talked about before, the use of proceeds as they come in. And we're going to be looking, as I said in prepared remarks, at both of those to be able to minimize dilution, obviously, and also maximize shareholder value. So that's the reason why we're keeping the aperture open. We want to make sure that we're looking at both those levers to be able to do just that. From an HIS timing standpoint, why I say this. I would say, normally, we probably wouldn't be talking about it until it was done, 2 factors that drove us to do it. The first one is we've made the decision, obviously. So we made the decision, so we know we're going to do it. And there's just a lot of external noise already on the topic. And as a result of all that external noise, we need to control the internal and external questions that we're getting. We have to be able to respond to this. So it just put us in a position where we have to communicate it and make sure that we can control that messaging. When it comes to the medtech business, MedSurg, Dental, you're right, there are different call points and not a lot of synergies there. but there are a lot of synergies when it comes to the intellectual property that we both use -- both the businesses use in their products and also the capability in R&D. We have great overlap in material science and data science. So those are the reasons why they connect. And as you would imagine, as most of you know, most of you actually follow both subsectors, where most of you don't always follow things like HIT. So when we think about medtech, there's a fit for that reason. And clearly, it's a cleaner story for you as well. Anything else, Wayde, that I missed? Anything else, Wayde? Wayde McMillan: No, that sounds good. Operator: Your next question comes from the line of Steven Valiquette with Mizuho Securities. Steven Valiquette: Just a follow-up on the question earlier on the overall market utilization trends. From our view, it seemed like there was maybe not a major change in patient volumes overall, but maybe just an acceleration in the shift of patients from inpatient to outpatient setting. So I guess in light of that, I'm curious if you would maybe endorse that same sort of view or maybe saw something different. And maybe just remind us of your general mix of MedSurg revenues or volume tied to inpatient versus outpatient and whether that's drastically different in the market one way or the other. Bryan Hanson: Yes. And just want to clarify, when you say outpatient, are you thinking like surgery centers? Or are you thinking care that would occur in the alternate market? Steven Valiquette: Probably more ASCs more than the latter. Bryan Hanson: Yes. My sense is I haven't seen and I can't report back that, that has accelerated, but it's been a pretty good movement that's been going on for a while. So that movement from the hospital to the surgery center has been happening for a long time. I don't -- I didn't personally see and I can't report that it accelerated in the short term here, but we do business in both. We have products that are used across almost every procedure used across multiple MedSurg need. And as a result of that, we're used in the hospital. We're used in the ASC. So it doesn't have as much of an impact on us as maybe somebody in orthopedics or other areas. But clearly, there has been a movement, as we all know, to the ASC for some time now. Operator: Your next question comes from the line of Brett Fishbin with KeyBanc Capital Markets. Brett Fishbin: Obviously, a lot of noise here, but one metric that stood out was just a very high level of growth from Acera. Maybe just expand a little bit on what drove the performance this quarter and thoughts on durability over the first year of ownership as you benefit from this integration. Bryan Hanson: Well, by the way, thanks for asking that question because that was one that I was hoping somebody would ask. It's a great profile of what exactly Wayde said before our acquisition strategy looks like. This is a very interesting asset in a space that we know with customer relationships we already have, where we can leverage their relationships on their Acera side and our team's relationships, and it's playing out. I mean this is already in a very attractive $1 billion market in a much larger multibillion-dollar market. And that synthetic tissue that Acera brought on the table that we call Restrata has a lot of differentiated qualities. So it's not only in an attractive space, but it is a highly differentiated technology versus what's being used in that space. So we're benefiting from all those things right now, and it feels pretty good. It feels pretty good. And we feel just to say, I'm not going to give specific guidance on it, but we absolutely feel that this will continue to be a double-digit grower for us. And the longer it goes at that pace, it's obvious straight math. It's going to become a bigger element of our overall portfolio and will have a bigger impact on our overall growth. So we're pretty excited about and really happy with the integration so far. Brett Fishbin: Great. And then I'll just ask one more follow-up on the revenue trend. Just given the noise, the ERP -- the buy-in ahead of the ERP, guidance came up by 50 bps on an underlying basis. So maybe just removing some of the moving pieces around timing, what got better versus the last time you guided that's driving the increase? Bryan Hanson: You want to take that? Wayde McMillan: Yes, sure. So obviously, we've had a really strong first half to the year, normalized 4%, which would be at the high end of our previous annual guide. And so performing at the high end of our guidance and certainly accelerating over prior years, what gave us the confidence to raise and tighten our range to that 3.5% to 4% on an ex SKU basis. Maybe just add a little bit more color there for you. Obviously, we want to continue to perform at this level. But if you just think about the business before normalized because I think a lot of people are focused on that, the first half of the year was 5.8%. And clearly, that was elevated by the advanced orders. But just on a pure reported basis, 5.8%, if you're looking at that guidance that you mentioned 3.5% to 4% for the year, that squeeze math puts you at flat for the second half of the year. And that's obviously driven in large part by the advanced orders that we talked about, our mitigation strategy for ERP. And so with those advanced orders reversing mostly in Q3, we're going to expect that Q3 to be in that minus 3% to minus 4% range. So I just want to make sure everybody understands that as those advanced orders clear in Q3, we're expecting sales growth to be in that minus 3% to minus 4% range. And then to complete the squeeze math, that puts our Q4 in that same 3% to 4% range, but on a positive side, and that gets the second half to flat growth. So we certainly have some noise in our numbers here across the quarters. But if you just take that step back and look at it on a full year basis, it clears out all that normalized advanced orders between Q2 and Q3. So we're certainly dealing with more variability given an ERP cutover, and this is our last large cutover that we're working through, it creates some noise amongst the quarters. But on a full year basis, we're very happy to be raising our guide again to that 3.5% to 4% on an ex SKU basis. Bryan Hanson: And then I think you have to see how it actually lands. But again, on an ex SKU basis, wherever we finish this year, our full expectation is we will be better than that next year. And as Wayde referenced at the top end of that range, we're already at the bottom of the LRP that was supposed to be in 2028. So we're certainly not going to stop there. We're going to keep moving. Brett Fishbin: That was really helpful on the cadence and thanks for clarifying on the midpoint magnitude. Operator: Your next question comes from the line of Rick Wise with Stifel. Frederick Wise: Maybe start off with a little more -- help us understand a little more about the advanced orders. I get the concept, $125 million, so just in case of disruption. But just as I reflect on it, I was just wondering, is this a quarter's worth of orders? Is it all used up by the end of this year? And so it won't have any impact on next year. Is it going to be used quickly, but how do we think -- given all the orders this quarter, how do we think about the second half P&L and the potential impact on ex all the moving pieces on sales, margins and EPS? Bryan Hanson: So maybe I'll start with that and then Wayde, you can provide the last bit color there. I would say the $125 million is not a full quarter. So we did put a full quarter of inventory in and it will absolutely be used in Q3. It's going to be used in Q3. The big question becomes, can we then fill the inventory levels back up. When you have the ERP cutovers, the reason why you build the inventory is because you can have challenges. And certainly, in every one of these, you have challenges. So we have to fight through those challenges, build the coffers back up, if you will, from an inventory standpoint and get back to where we would normally be from an inventory standpoint in Q3. But make no mistake that $125 million is going to get burned through really quickly because it's not a full quarter. Outside of that, any other comments you would want to make on the implications to either revenue growth or margin normalization? Wayde McMillan: Yes. I think we could just add, we included in our prepared remarks, the exact basis point impact of advanced orders, $0.34 on earnings per share, and you should just assume as a mirror image that it would be minus $0.34 as we give the $125 million advanced order sales back. The $0.34 comes off of earnings per share as well. And then, of course, we included the expectation for tariff refunds, and we booked that in Q2. That added $0.48 to the first half as well. So if you're looking at that first half, the second half cadence of earnings per share, obviously, it's the headwind from advanced orders, and then we're not expecting the tariff benefit to repeat again in the second half. But if you normalize it for those 2 things, you will see earnings per share acceleration from the first half to the second half, and that's based on the confidence that we have in the business and the momentum that we have here. Frederick Wise: And just as a follow-up question, Bryan, and Wayde, both, you talked about from various perspectives, the sort of the end of this long very difficult to achieve, but faster-than-expected process through implementing these ERP cutovers and transitions. And Bryan, you repeatedly talked about the language like it will free up people. There'll be cost savings, et cetera, et cetera. I assume it lowers costs. Maybe help us think once it's all done from your perspective, what are you going to be able to do? Where do you take off your foot, maybe where do you put your foot on the gas pedal and redeploy people, spend -- invest, spend the cost savings and -- how do we think about the potential accelerant impacts once it's all done? Bryan Hanson: Yes. First of all, again, I appreciate the question. I'll just give you an example. We're actually at the last phases now of ERP, and we're pretty good at it at this point, as you can imagine, and we've seen a lot of challenges, we've managed them. But even when things are going well on the ERP cutover, there are a lot of meetings at all levels in the organization, where our brain power is being used on solving problems because no matter how good you are, things happen and you've got to respond to those things and that's happening right now. The team is doing a great job, but it is extremely distracting at all levels in the organization. It is going to feel very good to put this behind us. The places that we're going to focus on will be pretty obvious for us. If you think about it, it's going to be the growth driver areas. That gets a disproportionate level of our investment. It's going to be our multiple savings programs, including programmatic savings and TFF, or Transform for the Future, program. Those are the areas where some of our best of the best right now are spending time on ERP cutovers and not on that. So once we move past this, we'll be able to redeploy those again, really sharp minds on those areas. Operator: Your next question comes from the line of Larry Biegelsen with Wells Fargo. Nathan Treybeck: This is Nathan Treybeck on for Larry. Bryan, I appreciate your earlier comments on 2027, but any finer point you can give on what parts of the portfolio would drive the acceleration relative to '26. And then when you say acceleration, would that be relative to the 3.5% to 4% that you're guiding when adjusting for the SKU exit? Bryan Hanson: Yes. So yes, the right way to think about it is adjusting for SKU because we will not have a SKU impact in 2027. Even if we're looking at reducing SKUs, we're not going to talk about it. It will be a much more manageable rate, and we wouldn't talk about it. So any numbers that we're talking about would be the ex SKU that Wayde is talking about. So the 3.5% to 4% is the ex SKU number. And the assumption would be that we would accelerate past that next year. I'm not going to speak to specifics on how much past that, but we would be better than that. And we expect it from every one of our business. Every one of our businesses needs to accelerate year-over-year. That's the plan. So it's MedSurg, it's Dental and it's HIS. All 3 businesses are expected to accelerate. And the areas of concentration for that acceleration will be in our growth drivers. And remember, it's not just the growth drivers. It's the focus there, but it's the research development that we're launching, the innovation -- innovative products that we're launching in that area and the specialization of sales organization. So those are the way that we look at it across the board, every business needs to get better year-over-year. Nathan Treybeck: Okay. And so heading into '27, I guess, how should we think about the P&L and I guess the level of noise from stranded cost or any remaining dis-synergies? Is that all cleared away as we head into '27? Bryan Hanson: Do you want to take that? Wayde McMillan: Yes. Sure. So if you're speaking to the HIS transaction, we'll be providing future updates on that and providing information similar to what we did with the Purification and Filtration transaction. It's just too early to provide any detail on that at this time. But you should expect us to follow a similar path where we provide a good amount of information there. Bryan Hanson: Outside, of course, HIS is to going to be the new variable. But to your point, a lot of the other stuff is going to be washed out in 2027. Unfortunately, we're going to add to it the HIS separation. So we'll continue to keep you updated though. Operator: Your last question comes from the line of Vik Chopra with BMO. Vikramjeet Chopra: Congrats on a nice quarter. Two for me. Bryan, with this HIS separation, does this transaction mark the final major portfolio action under the transformation plan or are there other businesses that could be candidates for divestiture or a strategic review? And I had a quick follow-up, please. Bryan Hanson: Yes. I mean the straight answer on that is that we're always looking at portfolio optimization. I mean, now whether it's segment level, business level, product level, look, it varies across those things, but we'll always be looking at active portfolio management. That said, and I want to be very clear, we see this now post P&F and eventually post-HIS as being a true medtech company. And so we feel pretty good about having both the MedSurg business and the Dental business. But I just don't ever want to take off the table the potential for portfolio optimization in the future. Vikramjeet Chopra: Okay. And then a quick follow-up. You talked about 20 product launches by early 2028, including some significant advanced wound care launches next year. I'm just curious which launches have the greatest potential to move the WAMGR? Or is this more of a portfolio effect story? Bryan Hanson: Yes. I'll tell you, I'm not going to get into specifics on the actual products, but you're right, it's almost 20 new products by the first quarter 2028. And that's just a follow-on from what we've referenced, I think previous quarter, maybe the quarter before that as well. But we will, because of the proximity to launch at our Investor Day in the first quarter, we're going to talk a lot more about these products. So I'm excited about that from a timing standpoint. But I want to make sure we see the opportunity to be able to drive performance in the market, not necessarily specific to these individual products, but because of the growth driver opportunities that I talked about in the prepared remarks. We have technologies today forget for a minute what we're going to launch, that's going to help us. But we already have technologies in the market today that are underpenetrated. They're advanced technologies that solve real patient problems that can reduce cost and it's underpenetrated. I gave you the IV-site management example, but 4 of our 5 growth drivers have that exact same model, a very similar model. So that's the opportunity that we have to be able to grow the WAMGR and obviously, also grow our overall revenue growth. Operator: I will now turn the call back over to Amy for closing remarks. Amy? Amy Wakeham: Great. Thank you, Mark. And thank you, everyone, for listening and for -- and to our analysts for your questions. If anyone does have follow-up questions or need anything else, please don't hesitate to contact the Investor Relations team directly. This concludes our second quarter fiscal year 2026 Conference Call. Mark, you can now go ahead and close out the call. Operator: This concludes today's conference call. You may now disconnect. Before you buy stock in Solventum, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Solventum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Solventum. The Motley Fool has a disclosure policy. Solventum (SOLV) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Solventum Corporation? Here are five stocks we like better. Second-quarter results exceeded expectations: Sales reached $2.2 billion, with organic growth of 9.5%, while adjusted performance benefited from advanced ERP-related orders and a $100 million tariff refund. Excluding those benefits, organic growth was approximately 4% and EPS was estimated at $1.73. Solventum raised its 2026 outlook: The company now expects 2.5%–3% organic sales growth, a 22.2%–22.7% operating margin, adjusted EPS of $7.10–$7.20 and free cash flow of $200 million–$300 million. Third-quarter growth is expected to decline temporarily as roughly $125 million of advanced orders reverse. The company is pursuing a separation of Health Information Systems: Solventum is evaluating a spin-off or sale to sharpen its focus on MedSurg and Dental, while citing HIS’s growth potential in AI-driven coding and international markets. Solventum Nears Inflection Point As It Begins to Unlock Value Solventum (NYSE:SOLV) reported second-quarter results that exceeded its internal expectations, supported by broad-based segment performance, planned order activity ahead of an ERP cutover and a tariff refund benefit. The company also announced plans to separate its Health Information Systems, or HIS, business as part of a broader effort to sharpen its focus on medical technology markets. Chief Executive Officer Bryan Hanson said the company delivered ahead of plan on both revenue and earnings, citing specialized commercial teams, product innovation and operating discipline. He said the company remains on track to achieve its long-range plan earlier than originally expected. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Target the Red-Hot Spin-Off and Merger Space With These ETFs “The quarter came in ahead of plan, top and bottom line,” Hanson said. “Organic growth and EPS were both ahead of expectations.” Second-quarter sales totaled $2.2 billion, rising 9.5% organically from a year earlier and 2.2% on a reported basis. Foreign exchange added 100 basis points to reported growth, while acquisitions and divestitures reduced reported growth by 830 basis points, primarily due to the sale of the Purification & Filtration business. The impact was partly offset by the Acera acquisition. → No Hangover: Revisiting Microsoft One Week After Earnings Up Over 20% in 2025, These 3 Stocks Are Boosting Buyback Capacity Chief Financial Officer Wayde McMillan said revenue growth was primarily volume-driven and included approximately $125 million of customer orders advanced ahead of the company’s North America ERP cutover. These orders are expected to mostly reverse in the third quarter. On a normalized basis, excluding the ERP-related timing effect, SKU rationalization headwinds and a partial separation timing benefit, Solventum estimated organic sales growth at about 4% for the quarter. Pricing remained within the company’s expected range of plus or minus 1%. MedSurg: Sales were $1.4 billion, with organic growth of 8.9%. ERP advanced orders accounted for roughly 700 basis points of growth, primarily in Infection Prevention and Surgical Solutions. Dental Solutions: Sales were $396 million, with organic growth of 15.2%. Advanced orders contributed about 10 percentage points of growth, while new product launches supported underlying performance. Health Information Systems: Sales were $354 million, with organic growth of 5.4%, driven by revenue cycle management solutions, customer retention and commercial execution. → MarketBeat Week in Review – 08/03 - 08/07 Hanson said Solventum has not experienced the market softness or procedure-volume pressure cited by some healthcare companies. He said the company continues to see favorable conditions across MedSurg, Dental and HIS, although management is monitoring broader industry trends. Gross margin rose 410 basis points year over year to 60.1%, including a one-time $100 million tariff refund. Excluding that refund, gross margin would have been approximately 55.6%, or 40 basis points below the prior-year level. McMillan attributed the decline to tariff and inflation headwinds, partly offset by savings programs and portfolio optimization. Operating income was $627 million and operating margin was 28.4%. Excluding the effects of advanced-order timing and the tariff refund, the operating margin would have been approximately 21.7%, slightly above the high end of the company’s initial full-year outlook. Solventum reported earnings per share of $2.55. That result included a $0.34 benefit from advanced orders and a $0.48 benefit from expected tariff refunds. Excluding those items, management estimated EPS would have been $1.73, ahead of its expectations. The company also recorded $157 million in litigation costs related to $204 million in estimated legal charges, net of $55 million in insurance proceeds received to date. Those costs were excluded from the company’s non-GAAP operating income and EPS measures. Solventum generated $144 million in free cash flow during the quarter, aided by the timing of tax payments and insurance proceeds. It ended the period with $403 million in cash and equivalents and net debt of $4.7 billion. During the quarter, the company repurchased nearly 4 million shares for $288 million, bringing first-half repurchases to 4.8 million shares for $355 million. Solventum said it is advancing the separation of its Health Information Systems business, which provides healthcare technology and revenue cycle management solutions. Hanson said the company believes HIS could create more value as an independent business or as part of a larger healthcare information technology company. Management said the unit’s financial profile is resilient and that it has growth opportunities in artificial intelligence-driven autonomous coding and international expansion. However, Hanson said the business has a different operating model from Solventum’s other operations and has limited integration with the company’s MedSurg and Dental segments. The company has not selected a transaction structure. Hanson said management is considering alternatives including a spin-off or a sale, with the goal of maximizing shareholder value. He said Solventum has received inbound interest in the business over time and expects a broad range of parties may be interested following the public announcement. Management expects to provide updates on the potential financial effects of the HIS separation at a later date. The company’s 2026 outlook continues to include the HIS segment. Following the previously announced Purification & Filtration divestiture and a potential HIS separation, Solventum expects to operate as a more focused med-tech company centered on MedSurg and Dental. Hanson said the company will continue to evaluate portfolio optimization opportunities but sees both remaining segments as central to its medical technology strategy. Solventum raised and tightened its 2026 outlook. The company now expects organic sales growth of 2.5% to 3%, excluding an anticipated 100-basis-point impact from SKU exits. On an ex-SKU basis, the forecast represents growth of 3.5% to 4%. The company increased its expected operating margin range to 22.2% to 22.7%, up from 21% to 21.5%, reflecting the full expected benefit from tariff refunds. Solventum raised its adjusted EPS outlook to $7.10 to $7.20, from $6.40 to $6.60, and now expects free cash flow of $200 million to $300 million. McMillan said third-quarter growth is expected to be affected by the reversal of the $125 million in advanced orders, with organic sales growth anticipated in the negative 3% to negative 4% range. The company expects fourth-quarter growth to return to the positive 3% to 4% range, resulting in approximately flat growth for the second half of the year after accounting for the timing effect. Separately, Solventum said it has exited nearly 70% of approximately 200 transition service agreements related to its separation from 3M and has migrated roughly 950 of 1,200 systems. The company remains on track to exit 90% of transition service agreements by the end of 2026. Management expects separation-related cash demands to begin declining in the fourth quarter. Hanson said completing the ERP and separation work should allow Solventum to redirect more resources toward growth drivers, product development, savings initiatives and margin expansion. Solventum Corporation, a healthcare company, engages in the developing, manufacturing, and commercializing a portfolio of solutions to address critical customer and patient needs. It operates through four segments: Medsurg, Dental Solutions, Health Information Systems, and Purification and Filtration. The Medsurg segment is a provider of solutions including advanced wound care, I.V. site management, sterilization assurance, temperature management, surgical supplies, stethoscopes, and medical electrodes. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Solventum Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Solventum SOLV reported second-quarter 2026 adjusted earnings per share (EPS) of $2.55, which beat the Zacks Consensus Estimate of $1.91 by 33.5%. The bottom line improved 50.9% year over year. GAAP EPS in the quarter was 53 cents compared with 51 cents in the year-ago quarter. Revenues of $2.21 billion rose 2.2% and surpassed the consensus mark of $2.17 billion by 2%. Organic sales increased 9.5%, aided by strong performance across all reportable segments, primarily driven by volume and product mix and including the expected benefit of advance orders placed ahead of ERP cutovers. Following the better-than-expected results, shares of SOLV gained 2.9% in yesterday’s after-market trading. The company’s shares has gained 6.2% in the year-to-date period compared with the industry’s increase of 0.9%. However, the broader S&P 500 Index has increased 12.8% in the same time frame. Image Source: Zacks Investment Research Reported growth included a 100-basis-point currency benefit and an 830-basis-point headwind from acquisitions and divestitures. The latter mainly reflected the September 2025 sale of the Purification and Filtration business, partly offset by the Acera acquisition. Management estimated normalized organic growth of about 4%. This adjusts for roughly 630 basis points of ERP-related advance orders, partly offset by about 100 basis points of SKU rationalization headwinds and a partial separation-timing benefit. MedSurg revenues totaled $1.37 billion, up 12.7% on a reported basis and 8.9% organically. ERP advance orders added an estimated 700 basis points to organic growth. Advanced Wound Care sales rose 14.9% year over year to $537 million, with organic growth of 7.1%. Infection Prevention and Surgical Solutions revenues increased 11.3% year over year to $836 million, while organic sales advanced 10.1% on higher adoption of antimicrobial IV-site management products. Acera contributed $32 million and recorded 48% growth. Dental Solutions revenues climbed 17% year over year to $396 million, while organic sales rose 15.2%. Advance ordering contributed about 10 percentage points, while new products supported underlying demand in restoratives and aesthetics. Health Information Systems revenues increased 4.4% year over year to $354 million, with organic growth of 5.4%. Revenue cycle management solutions benefited from healthy customer retention and commercial execution. SOLV also announced its intent to separate Health Information Systems (HIS) to sharpen its MedTech focus and give the software business greater strategic flexibility. Adjusted gross profit totaled $1.33 billion, up 9.8% year over year. As a percentage of revenues, the adjusted gross margin expanded 410 basis points to 60.1% from 56% in the prior-year quarter. Selling, general and administrative expenses totaled $927 million, up 20.1% year over year, mainly due to higher separation-related and net legal costs. Research and development expenses declined 5.8% year over year to $178 million. Adjusted operating expenses totaled $701 million, down 4.8% from the year-ago quarter. Adjusted operating income increased 32.3% year over year to $627 million. The adjusted operating margin expanded 650 basis points to 28.4%, primarily driven by the tariff refund and ERP-related advance-order timing benefits. Excluding these items, management estimated the adjusted operating margin at approximately 21.7%. Solventum exited the second quarter with cash, cash equivalents and investments of $403 million compared with $561 million in the previous quarter. Total assets increased to $14.2 billion from $14.1 billion in the previous quarter. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $38 million compared with $198 million in the year-ago period. Solventum Corporation price-consensus-eps-surprise-chart | Solventum Corporation Quote Solventum raised the lower end of its 2026 organic sales growth guidance. The company now expects sales to grow by 2.5-3% compared with the earlier guidance of 2-3%. Excluding an expected 100-basis-point SKU exit impact, the company now projects growth of 3.5-4%. Adjusted earnings guidance increased to $7.10-$7.20 per share from the prior range of $6.40-$6.60. Free cash flow is now expected to be between $200 million and $300 million compared with the earlier estimate of about $200 million. Solventum delivered a strong second-quarter 2026, with earnings and revenues surpassing the Zacks Consensus Estimate. Performance benefited from healthy demand, new product launches and stronger commercial execution across all three segments. MedSurg gained from negative pressure wound therapy and antimicrobial IV-site management products. Dental Solutions benefited from restorative and aesthetics offerings, while HIS maintained momentum in revenue cycle management. However, the reported growth rate was aided by approximately $125 million of advance orders ahead of ERP cutovers. Management estimated normalized organic growth of about 4% compared with the reported 9.5%. Most of the advance-order benefit is expected to reverse in the third quarter. Adjusted margins also received a sizable lift from a one-time tariff refund. Excluding the refund and ERP timing benefit, the adjusted operating margin was approximately 21.7%. Tariffs and inflation continued to pressure underlying gross profitability. Solventum continued to advance its transformation and portfolio strategy. The company announced plans to separate the HIS business, which should sharpen its focus on MedSurg and Dental Solutions. Acera remained a bright spot, supported by strong growth and high margins. The company also made progress in winding down its separation from 3M and continued share repurchases. Nonetheless, separation-related spending and legal costs weighed on GAAP profitability and first-half cash generation. The planned HIS transaction also remains at an early stage. Solventum currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the broader medical space are McKesson MCK, Phibro Animal Health PAHC and Cardinal Health CAH. McKesson carries a Zacks Rank #2 at present and has an estimated long-term growth rate of 13.7%. MCK’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.09%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. McKesson shares have gained 8.8% against the industry’s 12.7% decline in the year-to-date period. Phibro Animal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 21.5%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 16.25%. Phibro Animal Health stock has climbed 44.2% against the industry’s 17.1% decline in the year-to-date period. Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 17%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.27%. Cardinal Health’s shares have lost 2.6% compared with the industry’s 3.1% decline in the year-to-date period. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Solventum Corporation (SOLV) : Free Stock Analysis Report Cardinal Health, Inc. (CAH) : Free Stock Analysis Report McKesson Corporation (MCK) : Free Stock Analysis Report Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research