Dive Brief:
- Solventum said Wednesday it plans to separate its health information systems business that sells software to hospitals.
- The business generated sales of $1.4 billion last year. Solventum executives have identified potential for the unit to move faster as a separate entity.
- Selling or spinning off the unit will make Solventum a more focused medtech company, with its remaining businesses centered on the medsurg and dental markets.
Dive Insight:
The health information systems unit, which accounted for about 16% of Solventum’s sales last year, offers software in areas such as computer-assisted physician documentation and coding automation.
On an earnings call Wednesday, Solventum CEO Bryan Hanson called autonomous coding a “revolution” inside revenue cycle management. Hanson argued that separation will better equip the unit to pursue such opportunities.
“We’re going to have to see a different investment level. We’re going to have to see a different pace of innovation,” Hanson said. “And we truly do believe that this asset, on its own or with a scaled player that’s in the [health IT] space, will be able to get after that faster than we will.”
The terms of Solventum’s separation from 3M, which happened in April 2024, previously limited the company’s ability to spin off units. Since the two-year anniversary of its separation from 3M, Solventum has had “additional flexibility to evaluate and pursue more significant portfolio actions,” the CEO said.
Solventum is aiming to complete the separation in 12 to 18 months. The company has been receiving expressions of interest in the software unit for a while, Hanson said. Solventum remains open to either selling or spinning off the unit.
Whichever path Solventum chooses, Hanson expects the separation to be “about as easy as you're going to get.” No separation is easy, the CEO said, but Solventum kept the software business separate from its other operations, and the unit’s lack of a manufacturing footprint limits connections between the divisions.
Solventum sold its purification and filtration business to Thermo Fisher Scientific for $4.1 billion last year. With the planned separation of health information systems, Hanson is continuing to narrow Solventum’s focus on medtech markets.
“I want to be very clear, we see this now ... as being a true medtech company. And so we feel pretty good about having both the medsurg business and the dental business,” Hanson said. “But I just don't ever want to take off the table the potential for portfolio optimization in the future.”
