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In 2025, the United States government announced tariffs on imported goods from certain countries. In response, some of those countries threatened or imposed retaliatory tariffs and other measures. On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act (the "IEEPA") does not provide authority for the President to impose tariffs. During 2025, certain tariffs that impacted us were imposed under this statute pursuant to presidential executive order. The IEEPA tariffs were refunded in 2026. The U.S. has subsequently implemented new tariffs under different authorities, including Sections 122, 301, 338 and 232. The Company will continue to monitor developments.
Read in the filing ↗ Also in 10-Q of Aug 5, 2026, 10-Q of Aug 5, 2026, 10-Q of Nov 5, 2026
In 2025, the United States government announced new tariffs on imported goods from certain countries, and in response, foreign governments have threatened or imposed tariffs or other actions. On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act (the "IEEPA") does not provide authority for the President to impose tariffs. During 2025, certain tariffs that affected us were imposed under this statute pursuant to presidential executive order. After the ruling, the U.S. President signed an Executive Order which implemented a new tariff under Section 122 authority.
Read in the filing ↗ Also in 10-K of Feb 27, 2026
On March 4, 2026, the U.S. Court of International Trade ruled that certain tariffs imposed under the IEEPA were unlawful and directed the U.S. Customs and Border Protection to refund the collected IEEPA tariffs. The administrative process for seeking refunds of IEEPA tariffs previously paid remains under development and ultimate financial impact of this decision cannot be reasonably estimated at this time. The extent and timing of any potential recoveries of tariffs previously paid remain subject to further legal interpretation and administrative processes. The U.S. Administration has signaled that further tariffs under new authority will be released in 2026. The Company will continue to monitor developments and will evaluate the effect of the ruling on future reporting periods as additional information becomes available.
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Business segment operating income margin increased when compared to the same period last year as benefits from price, volume, savings programs, including Transform for the Future, and recognition of receivables for IEEPA tariff refunds, partially offset by tariffs and inflation, including freight.
Read in the filing ↗ Also in 10-Q of Aug 5, 2026, 10-Q of May 5, 2026
President to impose tariffs. During 2025, certain tariffs that affected us were imposed under this statute pursuant to presidential executive order. The ultimate financial impact of this decision cannot be reasonably estimated at this time. The extent and timing of any potential recoveries of tariffs previously paid remain subject to further legal interpretation and administrative processes. We will continue to monitor developments and will evaluate the effect of the ruling on future reporting periods as additional information becomes available.
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Business segment operating income margin increased when compared to the same period last year. The increase was primarily driven by recognition of receivables for IEEPA tariff refunds. Benefits from cost savings programs, including Transform for the Future, have largely offset impacts from inflation, tariffs and incremental investments.
Read in the filing ↗ Also in 10-Q of Aug 5, 2026, 10-Q of Aug 5, 2026
Cost of product, measured as a percent of sales of product, decreased for the first nine months of 2026 as compared to the same period last year. The decrease was primarily driven by the IEEPA tariff refunds of $100 million received in 2026. Inflation and incremental new tariff activity was partially offset by savings programs.
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• risks associated with market volatility, including potential inflationary pressures and uncertainty regarding tariffs and trade measures;
Read in the filing ↗ Also in 10-Q of Aug 5, 2026, 10-Q of Nov 5, 2026
Cost of product, measured as a percent of sales of product, decreased in both the second quarter and first six months of 2026 as compared to the same periods last year. The decrease was primarily driven by IEEPA tariff refunds and the benefit from programmatic savings programs, partially offset by inflation and tariff costs, which had minor impacts in both the second quarter and first six months of 2025.
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• GAAP and adjusted gross margin both increased, primarily driven by portfolio optimization, mix benefits and savings programs, partially offset by inflation and tariffs.
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• Operating cash flow for the quarter was $177 million and free cash flow was $97 million, ahead of expectations driven by IEEPA tariff refund.
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• GAAP and adjusted gross margin both increased by 80 bps due to programmatic savings, portfolio moves, sales leverage and mix, partially offset by tariffs and inflation headwinds.
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• GAAP operating income margin decreased driven by separation and restructuring costs while adjusted operating income margin decreased primarily due to tariffs and inflation, partially offset by operational improvements.
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Business segment operating income margin decreased when compared to the same period last year. The decrease was primarily driven by the impact of higher product costs due to tariffs.
Read in the filing ↗ Also in 10-Q of Aug 8, 2025, 10-Q of Nov 6, 2025, 10-K of Feb 27, 2026, 10-Q of May 5, 2026
Business segment operating income margin decreased when compared to the same period last year as a result of higher logistics costs, tariffs and other costs to operate our standalone structure after Spin-Off.
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• GAAP operating income margin decreased, primarily driven by net legal costs, separation and restructuring costs. Adjusted operating income margin increased primarily due to a combination of IEEPA tariff refund and ERP-timing benefit.
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GAAP and adjusted operating income margin declined due to the impact of incremental tariffs resulting in lower gross margins, and an increase in operating expenses related to public company stand-up costs and growth investments.
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Business segment operating income margin decreased when compared to the same period last year, primarily driven by the impact of ERP related order timing. The impact from inflation and tariffs was largely offset by programmatic savings.
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Business segment operating income margin increased when compared to the same period last year primarily due to the benefit of higher sales volume growth. Tariff and inflation impacts were largely offset by savings from Solventum Way and other supply chain benefits.
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Business segment operating income margin decreased slightly when compared to the same period last year. The decrease was driven by ERP order timing, higher business investments and compensation, partly offset by lower tariff costs and savings benefits from our Transform for the Future program.
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result, the Company is impacted by changes in the global regulatory and economic environment, including tariffs. The evolving regulatory and economic environment may impact our cost or ability to source products. To the extent possible the Company takes actions to offset these costs or identify alternative sources of supply.
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Solventum’s future results are subject to vulnerability with respect to materials and fluctuations in the costs and availability of purchased components, compounds, raw materials, energy, production capacity and labor due to shortages, increased demand and wages, logistics, supply chain interruptions, manufacturing site disruptions, regulatory developments, tariffs, inflation and other disruptive factors.
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IEEPA tariff refunds are accounted for as a gain contingency and are recognized in the financial statements when fully realized or realizable. Refunds attributed to inventory previously sold are recorded as a reduction of cost of product and refunds attributed to costs for hardware units in service are recorded as a reduction in other assets.
Read in the filing ↗ Also in 10-Q of Aug 5, 2026, 10-Q of Nov 5, 2026, 10-Q of Nov 5, 2026
GAAP and adjusted operating income margin remained largely consistent with prior year. On an adjusted basis, operating expense savings and the accretive benefit of the Purification and Filtration divestiture more than offset incremental tariff headwinds. Debt paydown following the sale of Purification and Filtration was the primary driver of the increase to adjusted earnings per share.
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Costs of product, measured as a percent of sales of product, increased in 2025 when compared to 2024. The increase was driven by the impact of new tariffs of approximately $55 million, the full year impact from inventory sourced under the master supply and transition manufacturing agreements with 3M, and higher logistics costs, partially offset by benefits from cost savings programs.
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Cost of product, measured as a percent of sales of product, increased in the third quarter of 2025 when compared to the third quarter of 2024. The increase was driven by increased costs due to the impact of higher sourcing costs from tariffs and inventory sourced under the master supply and transition manufacturing agreements with 3M, partially offset by benefits from cost savings programs.
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Cost of product, measured as a percent of sales of product, increased in the first nine months of 2025 when compared to the first nine months of 2024. The increase was driven by increased costs due to the impact of higher sourcing costs from tariffs and inventory sourced under the master supply and transition manufacturing agreements with 3M partially offset by benefits from cost savings programs.
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We have consistently delivered on our strategic, operational and financial commitments, achieving six consecutive quarters of positive volume growth, outperforming expectations and raising our 2025 outlook multiple times. We are moving towards our long-range sales targets faster than anticipated, and thanks to the implementation of our restructuring programs and tariff mitigation efforts, we are progressing well against our LRP margin targets, increasing our confidence for the future.
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Cost of product, measured as a percent of sales of product, increased in the first quarter of 2026 when compared to the first quarter of 2025. The increase was driven by increased costs due to the impact of higher sourcing costs, including tariffs which did not impact the first quarter of 2025. Higher costs were partially offset by the benefit from portfolio actions, including the sale of the Purification and Filtration business, and other cost savings initiatives.
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Costs of product includes manufacturing, engineering and logistics costs. The Company operates a global supply chain and sourcing organization, including product sourced under master supply and transition manufacturing agreements with 3M. As a result, the Company is impacted by changes in the global regulatory and economic environment, including tariffs. The evolving regulatory and economic environment may impact our cost or ability to source products. To the extent possible the Company takes actions to offset these costs or identify alternative sources of supply.
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Cost of product includes manufacturing, engineering and logistics costs. The Company operates a global supply chain and sourcing organization, including product sourced under master supply and transition manufacturing agreements with 3M. As a result, the Company is impacted by changes in the global regulatory and economic environment, including tariffs. The evolving regulatory and economic environment may impact our cost or ability to source products. To the extent possible the Company takes actions to offset these costs or identify alternative sources of supply.
Read in the filing ↗ Also in 10-Q of Nov 5, 2026
In April 2026, the U.S. Customs and Border Protection ("CBP") agency formalized a process for refunds. In June 2026, the Company submitted requests for refunds that were accepted by the CBP totaling approximately $ 120 million, including interest. The Company recognized a corresponding receivable in other current assets for the total amount and a pre-tax benefit of $ 100 million to cost of product within the condensed consolidated financial statements as of June 30, 2026. Other assets decreased by $ 14 million for tariffs previously capitalized as a cost of hardware.
Read in the filing ↗ Also in 10-Q of Nov 5, 2026
Solventum depends on various components, compounds, raw materials and energy (including oil and natural gas and their derivatives) supplied by others for the manufacturing of its products. If suppliers fail to meet their delivery obligations, raise prices or cease to supply to Solventum, it may continue to cause delays in delivery or significantly increase Solventum’s costs. If Solventum loses suppliers, if their operations are substantially interrupted, if their prices continue to increase significantly due to tariffs or inflationary pressures, or if any of them fail to meet performance or quality specifications, Solventum may be
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Our multi-year “Transform for the Future” initiative is designed to reshape our cost structure, improve operational efficiency and fuel innovation to further position us to achieve our margin targets despite significant tariff headwinds not contemplated in our LRP targets. Progress in separating from 3M enables us to aggressively pursue savings and efficiencies for a stronger future. We have exited more than 35% of transition service agreements and made significant progress in supply chain separation. Our successful ERP cutover, move to dedicated distribution centers in Europe and transition to Solventum-owned manufacturing sites are enabling new efficiencies and supporting improved free cash flow as we complete separation activities.
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… Trade and tariff actions have had an impact on Solventum and its suppliers and may have material adverse effects on Solventum's business, financial condition, results of operations and cash flows. Further escalation of specific trade tensions, including those between the U.S. and China, or more broadly of global trade conflict, could adversely impact Solventum’s business and operations …
Read in the filing ↗ Also in 10-K of Feb 28, 2025
Supplier relationships could be interrupted due to supplier material shortages, equipment malfunctions, transportation delays, tariffs, inflationary pricing pressures, work stoppages, labor shortages and other disruptive events, or could be terminated. In addition, some of Solventum’s suppliers are limited- or sole-source suppliers, and Solventum’s ability to meet its obligations to customers depends on the performance, product quality and stability of such suppliers and Solventum’s ability to source alternatives in a cost effective manner. Solventum may experience a sustained interruption in its receipt of adequate supplies or the distribution of its products, or disruption to key manufacturing sites’ operations, including due to government actions relating to discharge or emission permits or other legal or regulatory requirements. In addition, there can be no assurance that Solventum’s processes to minimize volatility in component and material pricing will be successful or that future price fluctuations or shortages will be managed. Solventum could incur contractual penalties, experience a deterioration in customer relationships or suffer harm to its reputation if it is unable to fulfill its obligations to customers. Any of the foregoing could have a material adverse effect on Solventum’s ability to fulfill supply obligations to its customers or on its business, results of operations, financial condition and cash flows.
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… competition and disruption in the healthcare industry; global economic, political and geopolitical conditions; changes in trade and tariff policies; changes in legislation or practices related to reimbursement, regulatory requirements and approvals; the development, manufacturing, marketing and sale of healthcare products; supply chain and operational execution; acquisitions, divestitures and other strategic transactions; Solventum’s separation from 3M and performance as a …
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