07.30.19
AT A GLANCE
Rank: #18 (Last year: #18)
$6.02 Billion ($32.8B total)
Prior Fiscal: $5.85 Billion
Percentage Change: +3%
No. of Employees: 93,516 (total)
Global Headquarters: St. Paul, Minn.
KEY EXECUTIVES
Michael F. Roman, Chairman of the Board and CEO
Nicholas C. Gangestad, Sr. VP and CFO
Mojdeh Poul, Exec. VP, Health Care Business Group
John P. Banovetz, Sr. VP, R&D and CTO
Julie L. Bushman, Exec. VP, International Operations
Ivan K. Fong, Sr. VP, Legal Affairs and General Counsel
Eric D. Hammes, Sr. VP, Manufacturing & Supply Chain
Kristen M. Ludgate, Sr. VP, Human Resources
Denise R. Rutherford, Sr. VP, Corporate Affairs
Stephen M. Shafer, Sr. VP, Business Development and Marketing-Sales
3M Health Care enjoyed a relatively quiet year. It experienced modest sales growth over the prior year, saw a new CEO named for its 3M parent, and had a bevy of product news announcements regarding new offerings. Then, with just a few days left in the 2018 calendar year, the company made a fairly significant transaction in the artificial intelligence (AI) space.
M*Modal, a healthcare technology provider of cloud-based, conversational AI-powered systems that help physicians efficiently capture and improve the patient narrative so they can spend more time with their patients and provide higher quality of care, sold its technology business to 3M for $1 billion. Annual revenue of M*Modal’s technology business is estimated to be approximately $200 million.
“This acquisition builds on our strategic commitment to invest in our Health Information Systems business and expands the capabilities of our revenue cycle management and population health priority growth platform,” said Mike Vale, executive vice president of the 3M Health Care Business Group.
According to the company, 3M Health Information Systems (HIS) business works with more than 8,000 healthcare organizations worldwide, both providers and payers, to deliver software and services across the continuum of care. 3M HIS offerings, which include the 3M 360 Encompass software platform, combine clinical documentation systems and risk assessment methodologies to help accurately capture, analyze, and advance patient information.
3M expects to maintain a strategic business relationship with the remaining services business—transcription, scribing, and coding—of the Pittsburgh, Pa.-based vendor, which was not part of the transaction, to help ensure continuity and strong customer support.
The approximately 750 former M*Modal employees join a 3M business that has enjoyed low, but steady, single-digit gains in recent years. The 2018 $6.02 billion sales total marked a 2.9 percent increase over 2017’s $5.85 billion, which itself was a 4.4 percent rise over the previous year. The company notes that on an organic local-currency sales basis, the growth in 2018 was led by food safety, health information systems, and medical solutions. Further, oral care sales also increased, due to positive growth internationally and particularly in developing economies. On the other hand, sales declined in drug delivery systems.
ANALYST INSIGHTS: 3M’s recent acquisition of Acelity reaffirms 3M’s commitment to its wound care business. After a period of initial integration and portfolio reflection, expect 3M to continue to supplement this segment through additional M&A activities. This acquisition is just the beginning for 3M in this market area.
The modest increases in the Health Care business’ revenue mirror the parent company’s annual total, which saw similar smaller, but steady, gains year over year. On the whole, 3M finished 2018 with $32.77 billion in net sales. Health Care’s contribution represents 18.4 percent of the firm’s total. The Industrial business’ $12.27 billion, which reflected a 3.4 percent rise over 2017, accounts for more than a third of the total company’s sales (37.4 percent). Between them in order of sales totals among the company’s businesses is Safety and Graphics, with its $6.83 billion—20.8 percent of the organization’s total and a 9.5 percent gain over 2017. Electronics and Energy suffered a 0.5 percent loss between the two years—the only one to experience negative growth of all the businesses. It brought in $5.47 billion in 2018, 16.7 percent of 3M’s total. Finally, the Consumer business—14.6 percent—rose 1.4 percent to close at $4.80 billion.
Taking a look at 3M’s worldwide footprint, sales are broken down into four distinct regions. While the parent company’s largest area for sales (39.2 percent) and second largest increase year over year (3.8 percent) was the United States, which finished at $12.84 billion, the Health Care business remained flat there (specifically, a 0.2 percent fall). Asia Pacific (31.3 percent), on the other hand, grew sales 4.5 percent company-wide to $10.25 billion and specifically 10.2 percent for Health Care. The Europe, Middle East, and Africa region (20.3 percent) ended the 2018 fiscal year at $6.65 billion, a 3.1 percent gain; Health Care contributed 3.8 percent increased sales during the 12-month period. Finally, Latin America/Canada (9.2 percent) pulled in $3.02 billion in sales, a 0.3 percent loss compared to 2017, whereas Health Care rose 2 percent.
Perhaps in an attempt to improve upon the aforementioned performance in the coming years, just before the end of the first quarter in 2018, 3M announced it had appointed a new CEO to lead the firm. Scheduled to take the reins on July 1, Michael F. Roman—a 30-year veteran of the organization during which he held a leadership position over the Industrial business and also served as chief strategist—was promoted from serving as executive vice president and chief operating officer, which he took on in July 2017.
Roman succeeded Inge G. Thulin, who was appointed to a newly created position—executive chairman of the board—which was also made effective on July 1, 2018. In the new role, Thulin would continue to chair 3M’s Board of Directors. He was also expected to work closely with Roman on longer-term strategic initiatives for the company. The position, however, was apparently created merely as a method to facilitate a gentle transition of power in the top leadership role from Thulin to Roman as the firm announced Thulin’s retirement less than a year later, scheduled to take place on June 1, 2019.
As new products are the lifeblood of maintaining a healthy revenue stream, Roman will undoubtedly be eager to see the emergence of innovative offerings from the Health Care business. To that end, the company had a number of notable product news announcements in 2018.
As part of the industry-wide attempt to curb healthcare-associated infections (HAI) as much as possible, 3M introduced the SoluPrep Film-Forming Sterile Surgical Solution—a 2 percent chlorhexidine gluconate and 70 percent isopropyl alcohol surgical skin prep that uses the firm’s technology to help clinicians in the fight against surgical site infections (SSI). The product benefits from 3M’s expertise in polymer and adhesive technology in the form of a proprietary Prep Protection Film. When the copolymer film dries, it forms a water-insoluable film on the skin, helping the proven bacteria-killing agent chlorhexidine gluconate stay on a patient’s skin and be able to withstand the rigors of simulated surgical conditions, including repetitive wiping.
Other products intended to aid in improving patient care, Tegaderm Antimicrobial IV Advanced Securement Dressing and Antimicrobial Transparent Dressing were launched as peripheral intravenous maintenance solutions. The dressings integrate chlorhexidine gluconate transparently throughout the adhesive to suppress normal skin flora regrowth on prepped skin for up to seven days. The dressing’s transparency provides clinicians continuous site visibility, which enables early identification of complications at the insertion site.
The Health Care business also expanded its lineup of advanced adhesives for medical devices with the addition of Single Coated Medical Extended Wear Adhesive Nonwoven Tape on Liner, a pressure sensitive adhesive that offers omni-directional stretch for high levels of conformability and breathability. The thin, water-resistant tape offers excellent initial skin adhesion and a 14-day wear time, as well as improved conformability during long wear times compared to other tapes in the product line. It is EtO, E-beam, and gamma sterilization compatible.
With another product announcement tied to the fight against HAIs and specifically SSIs, 3M announced the FDA 510(k) clearance for its Attest Super Rapid Biological Indicator (BI) System for Steam, which provided BI test results in 24 minutes. The new capability was attainable for customers through a software upgrade to existing Attest Auto-reader 490 and 490H units. The upgrade enabled all customers who have existing hardware to receive the benefit of a 24-minute readout at no extra charge.
Given the recommendation that single-patient stethoscopes be used for patients in isolation to help prevent the transmission of infectious diseases, the firm offered a high-quality disposable stethoscope designed to combine excellent sound quality and comfort to help eliminate the use of personal stethoscopes in isolation environments.
Rank: #18 (Last year: #18)
$6.02 Billion ($32.8B total)
Prior Fiscal: $5.85 Billion
Percentage Change: +3%
No. of Employees: 93,516 (total)
Global Headquarters: St. Paul, Minn.
KEY EXECUTIVES
Michael F. Roman, Chairman of the Board and CEO
Nicholas C. Gangestad, Sr. VP and CFO
Mojdeh Poul, Exec. VP, Health Care Business Group
John P. Banovetz, Sr. VP, R&D and CTO
Julie L. Bushman, Exec. VP, International Operations
Ivan K. Fong, Sr. VP, Legal Affairs and General Counsel
Eric D. Hammes, Sr. VP, Manufacturing & Supply Chain
Kristen M. Ludgate, Sr. VP, Human Resources
Denise R. Rutherford, Sr. VP, Corporate Affairs
Stephen M. Shafer, Sr. VP, Business Development and Marketing-Sales
3M Health Care enjoyed a relatively quiet year. It experienced modest sales growth over the prior year, saw a new CEO named for its 3M parent, and had a bevy of product news announcements regarding new offerings. Then, with just a few days left in the 2018 calendar year, the company made a fairly significant transaction in the artificial intelligence (AI) space.
M*Modal, a healthcare technology provider of cloud-based, conversational AI-powered systems that help physicians efficiently capture and improve the patient narrative so they can spend more time with their patients and provide higher quality of care, sold its technology business to 3M for $1 billion. Annual revenue of M*Modal’s technology business is estimated to be approximately $200 million.
“This acquisition builds on our strategic commitment to invest in our Health Information Systems business and expands the capabilities of our revenue cycle management and population health priority growth platform,” said Mike Vale, executive vice president of the 3M Health Care Business Group.
According to the company, 3M Health Information Systems (HIS) business works with more than 8,000 healthcare organizations worldwide, both providers and payers, to deliver software and services across the continuum of care. 3M HIS offerings, which include the 3M 360 Encompass software platform, combine clinical documentation systems and risk assessment methodologies to help accurately capture, analyze, and advance patient information.
3M expects to maintain a strategic business relationship with the remaining services business—transcription, scribing, and coding—of the Pittsburgh, Pa.-based vendor, which was not part of the transaction, to help ensure continuity and strong customer support.
The approximately 750 former M*Modal employees join a 3M business that has enjoyed low, but steady, single-digit gains in recent years. The 2018 $6.02 billion sales total marked a 2.9 percent increase over 2017’s $5.85 billion, which itself was a 4.4 percent rise over the previous year. The company notes that on an organic local-currency sales basis, the growth in 2018 was led by food safety, health information systems, and medical solutions. Further, oral care sales also increased, due to positive growth internationally and particularly in developing economies. On the other hand, sales declined in drug delivery systems.
ANALYST INSIGHTS: 3M’s recent acquisition of Acelity reaffirms 3M’s commitment to its wound care business. After a period of initial integration and portfolio reflection, expect 3M to continue to supplement this segment through additional M&A activities. This acquisition is just the beginning for 3M in this market area.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
The modest increases in the Health Care business’ revenue mirror the parent company’s annual total, which saw similar smaller, but steady, gains year over year. On the whole, 3M finished 2018 with $32.77 billion in net sales. Health Care’s contribution represents 18.4 percent of the firm’s total. The Industrial business’ $12.27 billion, which reflected a 3.4 percent rise over 2017, accounts for more than a third of the total company’s sales (37.4 percent). Between them in order of sales totals among the company’s businesses is Safety and Graphics, with its $6.83 billion—20.8 percent of the organization’s total and a 9.5 percent gain over 2017. Electronics and Energy suffered a 0.5 percent loss between the two years—the only one to experience negative growth of all the businesses. It brought in $5.47 billion in 2018, 16.7 percent of 3M’s total. Finally, the Consumer business—14.6 percent—rose 1.4 percent to close at $4.80 billion.
Taking a look at 3M’s worldwide footprint, sales are broken down into four distinct regions. While the parent company’s largest area for sales (39.2 percent) and second largest increase year over year (3.8 percent) was the United States, which finished at $12.84 billion, the Health Care business remained flat there (specifically, a 0.2 percent fall). Asia Pacific (31.3 percent), on the other hand, grew sales 4.5 percent company-wide to $10.25 billion and specifically 10.2 percent for Health Care. The Europe, Middle East, and Africa region (20.3 percent) ended the 2018 fiscal year at $6.65 billion, a 3.1 percent gain; Health Care contributed 3.8 percent increased sales during the 12-month period. Finally, Latin America/Canada (9.2 percent) pulled in $3.02 billion in sales, a 0.3 percent loss compared to 2017, whereas Health Care rose 2 percent.
Perhaps in an attempt to improve upon the aforementioned performance in the coming years, just before the end of the first quarter in 2018, 3M announced it had appointed a new CEO to lead the firm. Scheduled to take the reins on July 1, Michael F. Roman—a 30-year veteran of the organization during which he held a leadership position over the Industrial business and also served as chief strategist—was promoted from serving as executive vice president and chief operating officer, which he took on in July 2017.
Roman succeeded Inge G. Thulin, who was appointed to a newly created position—executive chairman of the board—which was also made effective on July 1, 2018. In the new role, Thulin would continue to chair 3M’s Board of Directors. He was also expected to work closely with Roman on longer-term strategic initiatives for the company. The position, however, was apparently created merely as a method to facilitate a gentle transition of power in the top leadership role from Thulin to Roman as the firm announced Thulin’s retirement less than a year later, scheduled to take place on June 1, 2019.
As new products are the lifeblood of maintaining a healthy revenue stream, Roman will undoubtedly be eager to see the emergence of innovative offerings from the Health Care business. To that end, the company had a number of notable product news announcements in 2018.
As part of the industry-wide attempt to curb healthcare-associated infections (HAI) as much as possible, 3M introduced the SoluPrep Film-Forming Sterile Surgical Solution—a 2 percent chlorhexidine gluconate and 70 percent isopropyl alcohol surgical skin prep that uses the firm’s technology to help clinicians in the fight against surgical site infections (SSI). The product benefits from 3M’s expertise in polymer and adhesive technology in the form of a proprietary Prep Protection Film. When the copolymer film dries, it forms a water-insoluable film on the skin, helping the proven bacteria-killing agent chlorhexidine gluconate stay on a patient’s skin and be able to withstand the rigors of simulated surgical conditions, including repetitive wiping.
Other products intended to aid in improving patient care, Tegaderm Antimicrobial IV Advanced Securement Dressing and Antimicrobial Transparent Dressing were launched as peripheral intravenous maintenance solutions. The dressings integrate chlorhexidine gluconate transparently throughout the adhesive to suppress normal skin flora regrowth on prepped skin for up to seven days. The dressing’s transparency provides clinicians continuous site visibility, which enables early identification of complications at the insertion site.
The Health Care business also expanded its lineup of advanced adhesives for medical devices with the addition of Single Coated Medical Extended Wear Adhesive Nonwoven Tape on Liner, a pressure sensitive adhesive that offers omni-directional stretch for high levels of conformability and breathability. The thin, water-resistant tape offers excellent initial skin adhesion and a 14-day wear time, as well as improved conformability during long wear times compared to other tapes in the product line. It is EtO, E-beam, and gamma sterilization compatible.
With another product announcement tied to the fight against HAIs and specifically SSIs, 3M announced the FDA 510(k) clearance for its Attest Super Rapid Biological Indicator (BI) System for Steam, which provided BI test results in 24 minutes. The new capability was attainable for customers through a software upgrade to existing Attest Auto-reader 490 and 490H units. The upgrade enabled all customers who have existing hardware to receive the benefit of a 24-minute readout at no extra charge.
Given the recommendation that single-patient stethoscopes be used for patients in isolation to help prevent the transmission of infectious diseases, the firm offered a high-quality disposable stethoscope designed to combine excellent sound quality and comfort to help eliminate the use of personal stethoscopes in isolation environments.
