Healthcare solutions provider Solventum (NYSE: SOLV) announced better-than-expected revenue in Q4 CY2025, but sales fell by 3.7% year on year to $2.00 billion. Its GAAP profit of $0.36 per share was 37.3% below analysts’ consensus estimates.

Is now the time to buy Solventum? Find out by accessing our full research report, it’s free.

"Solventum's fourth quarter results reflect another quarter of solid performance resulting in full year 2025 results ahead of our expectations for sales and EPS," said Bryan Hanson, chief executive officer of Solventum.

Company Overview

Founded in 1985, Solventum (NYSE: SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Solventum struggled to consistently increase demand as its $8.33 billion of sales for the trailing 12 months was close to its revenue three years ago. This wasn’t a great result and is a sign of lacking business quality.

Long-term growth is the most important, but within healthcare, a stretched historical view may miss new innovations or demand cycles. Just like its three-year trend, Solventum’s revenue over the last two years was flat, suggesting it is in a slump.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Solventum’s organic revenue averaged 2.3% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Solventum’s revenue fell by 3.7% year on year to $2.00 billion but beat Wall Street’s estimates by 1.9%.

Looking ahead, sell-side analysts expect revenue to decline by 3.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds.

The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Solventum has been an efficient company over the last four years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 20.1%.

Looking at the trend in its profitability, Solventum’s operating margin rose by 5.4 percentage points over the last four years. The company’s two-year trajectory shows its performance was mostly driven by its recent improvements.

This quarter, Solventum generated an operating margin profit margin of 6.2%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Solventum, its EPS declined by 31.6% annually over the last three years while its revenue was flat. We can see the difference stemmed from higher interest expenses or taxes as the company actually improved its operating margin and repurchased its shares during this time.

In Q4, Solventum reported EPS of $0.36, up from $0.17 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Solventum’s full-year EPS of $8.88 to shrink by 64.1%.

Key Takeaways from Solventum’s Q4 Results

It was good to see Solventum narrowly top analysts’ organic revenue expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this was a weaker quarter. The stock remained flat at $77.00 immediately after reporting.

Should you buy the stock or not? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).