Solventum Corporation

As a reminder, this conference is being recorded. All lines have been placed on mute to prevent any background noise. I would now like to turn the program over to your host for today's conference, Amy Wickham, Senior Vice President of Investor Relations and Finance Communications. Please proceed.

Thank you. Good afternoon and welcome to Salventum's second quarter fiscal year 2025 earnings call. Joining me on today's call are Chief Executive Officer Brian Hanson and Chief Financial Officer Wade McMillan. A replay of today's earnings call will be available later today on the Investor Relations section of our corporate website. The earnings release and presentation are both available on the site now. During today's call, our discussion and any comments we make will be made on a non-GAP basis unless they've been specifically called out as GAP. The non-GAP information discussed is not intended to be considered in isolation or as a substitute for the reported GAP financial information. You're encouraged to review the supporting schedules in today's earnings press release to reconcile the non-GAP measures with the GAP reported numbers. Additionally, our discussion on today's call will include forward-looking statements, including but not limited to expectations about our future financial and operating performance. We make these statements 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. For the Q&A portion of today's call, as a reminder, please limit yourself to one question and one related follow-up. If you have additional questions, you're more than welcome to rejoin the queue. And with that, I'd like to now hand the call over to Brian.

All right, great. Thanks, Amy, and to all of our shareholders and everyone else interested in our story. I just wanna say thanks for joining us today for our second quarter results. And I'll just start by saying that we are continuing where we left off in Q1, delivering another solid quarter. And as a result of this positive momentum and strong execution, we are raising our sales growth and EPS guidance for the year. Now, this continued strong momentum gives us even more confidence in delivering the growth and margin targets that we outlined at Investor Day back in March. Certainly, there is still work to be done. There's no question about that. But I am very happy with the progress the teams are making across all of our businesses. And we are quickly and importantly decisively building on the strong foundation established by 3M. Our differentiated brands in attractive and diverse markets now combined with the cultural and structural enhancements we've already made are delivering results and accelerating our growth. And importantly, again, putting us on a clear path to achieve our long range plan commitments. And in addition to this, our work to revamp our innovation process is on track. And our forecasted new product pipeline is steadily increasing in value as a result. And then once we close the PNF transaction, as we've stated before, we will focus on discipline, tuck in M&A to further enhance our progress. Overall, it's clear to me that our value creation framework and our mission to improve lives have aligned our organization to focus on and deliver results and begin to establish Solventum as a mission-driven performance leader in our industry. And I wanna thank our dedicated global teams for advancing our mission and driving our success. This type of transformation just doesn't happen without your dedication and your desire to win. So again, thank you for making it happen. Okay, a few quick updates before moving to our business segments. Let's start with separation. Wade's gonna give more color on separation in a minute, but I'll just quickly highlight that things are proceeding well and they are on track. And I can say that a big part of our success here is thanks to the very experienced team that we have assembled. They have been there and done this before, and they are leveraging past insights to mitigate risk in our process. And our multi-year ERP implementation reached an important milestone as we executed the system cutover in Europe this quarter. And as most of you probably know, the implementation, these types of implementations are not without challenges. And well, we experienced some of those challenges in the quarter, but the solvers in IT, our global supply chain and our businesses came together and worked as a team to leverage our comprehensive risk mitigation plans. And as a result, they delivered the quarter, but most importantly, they delivered for our customers and patients. And I can tell you that this success is a strong example of one of Solventum's five core values, call it advancing together. And it increases our confidence, certainly my confidence, that even when things don't go exactly as planned, we have the right team with the right experience and the commitment to overcome and deliver. This is also a great example of this team's ability to effectively manage our go-forward ERP implementations as well. Okay, switching to tariffs. Again, Wade is gonna provide more detail here, but just as a quick summary, last quarter we discussed some of the mitigations we've already put into place and have been executing against to offset the tariff impact. And based on what we know today about current trade policy and our mitigation efforts, we're reducing the estimated tariff impact for 2025. Obviously, given the fluidity of the environment, we will continue to actively monitor the situation and implement new strategies as needed. Okay, now I'm gonna move to our business segments where we continue to demonstrate positive momentum. And I can tell you, a big part of this progress stems from the strategic clarity that we've created through our market and growth driver selection process. That was a very important process to create clarity of focus. And as a reminder, we have five growth drivers that will account for 80 plus percent of our growth over the long range plan. And as we've stated, the five growth drivers are negative pressure wound therapy, IV site management, sterilization assurance, core restoratives and revenue cycle management. Now, starting with our MedSurg business, we had another solid quarter of progress fueled by our existing and differentiated brands, our recent new product launches and our commercial restructuring to specialize the sales channel in our growth driver areas. For some additional color on the two sub segments of MedSurg, our IP and SS business shows solid underlying business performance in the quarter and also benefited from some follow on advanced order timing. Now this order timing benefit was offset by short term pressure in our advanced wound care business due to a voluntary recall that had no patient safety concerns. Now, as we look forward into the back half of 2025, we expect advanced wound care to accelerate and our IP and SS sales to moderate. Relative to advanced wound care, we expanded our VAC peel in place launch into Europe and established a dedicated acute care sales team to ensure focus on this game changing technology. Importantly, we've also recently won several large negative pressure wound therapy customers, reaffirming our competence in our technology differentiation and boosting momentum as we come into the back half of the year. When it comes to IV site management, we continue to see strong demand for our Tegaderm antimicrobial solutions with new product launches in major markets across Europe and Asia, again, supported by specialized sales teams across our regions. And within our sterilization assurance business, we have seen early success with our three new product launches and even though these are in early stages of the launch, we are already gaining renewals from our larger customers and our specialized sales team is generating the momentum to drive to full adoption. In our gentle solutions business, we continue to gain momentum in core restoratives with results driven by a focused portfolio, accelerating new product innovation and specialization of the sales channel. New product launches were a key contributor in the quarter, driven by strong demand for a ClinPro clear and Philtech easy match. And our customer response to our first to market 3D printed clarity precision grip attachments has remained positive, enhancing our ability to deliver a seamless combination of dental and orthodontic solutions. This innovation underscores momentum within the dental team's internal bet area of custom smile solutions. And collectively, these categories help offset pressure in areas like impressioning materials and core orthodontics, helping us to stabilize a segment, even in a challenging market environment. And the team expects new product demand to accelerate into the back half of the year and ultimately drive sales growth improvements as well. Okay, in our health information systems business, we are clearly focused on revenue cycle management and a key component of this is autonomous coding. And here we recently announced a new partnership with Ensemble, who is a leading end to end provider of revenue cycle management services. This is yet another step in solidifying HIS as the largest autonomous coding vendor and underscores its leadership in AI driven solutions that transform customer operations. The ongoing success of 360 and compass showcases HIS ability to streamline workflows and deliver meaningful customer benefits. And in our international markets, we are seeing 360 and compass installations in Australia and expansion efforts in the Middle East, demonstrating HIS's commitment to equipping healthcare providers with the tools they need to operate smarter around the globe. Last month, I was on site with over 300 of our HIS customers at our annual customer experience summit. And I tell you it was a fantastic opportunity to engage with customers, hear direct feedback about our solutions and importantly for me, to learn more about our customers views on the future of this space. Overall, I would say it was an exciting week, very well spent with very good feedback. And last but not least, turning to our purification and infiltration business, we saw continued strong demand for our bioprocessing solutions, again, reaffirming the importance of our advanced technologies in this space and our investment in expanded capacity for our industrial business also contributed, driving accelerated growth throughout the quarter. Overall, the PNF business is well positioned for sustained growth and our transaction process with Thermo is moving along nicely. And relative to the PNF transaction, in June we filed an amendment to our agreement for Solventum to retain the drinking water business. This has helped simplify the transaction and importantly increases the opportunity to accelerate the close. Keeping drinking water also provides Solventum with the opportunity to unlock additional value tied to this business. And I would just say overall, Thermo has been a great partner and we appreciate their collaboration, not just in streamlining the process, but also very importantly, their commitment to ensuring the success of our PNF business. Now, before I close, I'd like to highlight a couple of external recognition honors we received during the quarter. Now, first, Solventum earned its place on the Fortune 500 in our first year as a standalone company. We were also excited to be named as a best company to work for by US News and World Report. And I will tell you, this recognition in particular reflects the hard work of our teams and the early success in driving our values and strategy to put people first and become a best and preferred place to work. And in closing, I just say that thanks to our company wide teamwork and progress against our transformation plan, Solventum continues to chart a solid path forward. We have an incredible opportunity to create meaningful value and we are making consistent and repeatable progress in that value creation story. The foundation we inherited combined with the aggressive actions we've already taken positions us well for continued growth and margin acceleration and ultimately, sustainable value creation. And with that, I'll turn it over to Wade for a closer look at our financial results and other key updates. Okay, Wade, pass it over to you.