07.20.23
Rank: #16 (Last year: #14)
$8.42 Billion
Prior Fiscal: $9.05 Billion
Percentage Change: -6.9%
R&D Expenditure: $5.4B (total)
Best FY22 Quarter: Q1 $8.8B (total)
Latest Quarter: Q1 $8.0B (total)
No. of Employees: 92,000 (total)
Global Headquarters: Saint Paul, Minn.
KEY EXECUTIVES:
Michael F. Roman, Chairman & CEO, 3M
Monish Patolawala, Exec. VP, Chief Financial and Transformation Officer, 3M
John Banovetz, Exec. VP, Chief Technology Officer and Environmental Responsibility
Jeff Lavers, Group President, Health Care
MPO aims to identify lofty trends for 2022’s top 30 medical device companies, and spinning off medical device/healthcare divisions into pure-play, standalone firms might fly above the rest. 3M followed this trend with the proclamation of spinning off its Health Care business last July. The new 3M will remain a global material science company for industrial and consumer end markets, and Health Care will become a global, diversified, healthcare technology company with a focus on wound care, healthcare IT, oral care, and biopharmaceutical filtration.
“Disciplined portfolio management is a hallmark of our growth strategy,” 3M chairman and CEO Mike Roman said in a press release announcing the spinoff. “Our management team and board continually evaluate the strategic options that will best drive long-term sustainable growth and value. The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities.”
According to 3M, Health Care is expected to be spun off with net leverage of about 3.0 - 3.5x EBITDA and be positioned for rapid deleveraging. Further, “New 3M” intends to keep a stake of 19.9% in Health Care, which will be monetized over time.
3M Health Care posted $8.42 billion of revenue last fiscal year, dropping just shy of 7% from the previous year. According to 3M’s annual report, sales grew in separation and purification, health information systems, food safety, and medical solutions, while oral care proceeds were flat. COVID-related trends on elective procedure volumes and ongoing inflationary pressures also continued to impact growth. Sales were also lost year-on-year related to divestiture from the Food Safety Division split-off transaction and combination with Neogen completed in Q3 2022. Operating income margins fell due to increased raw materials and logistics costs, along with manufacturing productivity headwinds.
ANALYST INSIGHTS: When 3M Health Care is spun off from its parent 3M organization later this year, expect positive things to happen for this currently stodgy company. I expect 3M in 2024 to behave similar to GE HealthCare in 2023—engaging in new growth strategies organically and inorganically in an aggressive manner.
3M released its latest medical adhesive, the Spunlace extended wear adhesive tape on liner, 4576, in April. The flexible, conformable acrylate-based adhesive is meant for extended wear devices needing attachment to the skin for an up to a 21-day wear time, both in and out of care facilities.
3M Health Information Systems (HIS) earned fully authorized Federal Risk and Authorization Management Program (FedRAMP) status for its 3M RevCycle health services platform (RHSP) in September. 3M RHSP hosts and supports critical operations 3M HIS offers, including natural language processing support for medical coding, clinical documentation integrity, clinician input and medical coding edits, self-service reporting, and evaluation and management. For care service providers, FedRAMP offers standardized security framework for cloud products and services recognized by executive branch federal agencies.
Also in September, 3M HIS revealed its 3M M*Modal Fluency Direct and medical necessity solutions will be available in Epic’s new Garden Plot. The software is available to independent medical groups with 40+ providers via a hosted, supported Software-as-a-Service (SaaS) model. The work will create a pathway to deliver 3M content and tech to end-users through an electronic health record.
3M finished sale of rights to its Neoplast and Neobun brands, as well as related assets in Thailand and other Southeast Asia countries, to Selic Corp. Public Company in October. These products were mainly part of 3M’s Skin Health & Wellness business: sports and medical tapes, bandages, and medicated products for the consumer and healthcare industries. According to 3M, the sale did not have a material impact on financial results but was a portfolio management move.
The company’s V.A.C. Therapy negative pressure wound therapy (NPWT) reached the clinical evidence milestone of 2,000 published, peer-reviewed studies in October as well, making it the only NPWT solution to achieve this honor. V.A.C. Therapy, according to 3M, accounts for over 75% of published NPWT clinical evidence. Last year, 3M also rolled out the first-ever silicone-acrylic hybrid drape for V.A.C. Therapy—3M Dermatac Drape—which was engineered to be gentle on skin and easy for clinicians to use.
Rounding out October was 3M Oral Care’s introduction of the 3M Filtek matrix, a restorative solution for dental composite placement. The procedure starts with a digital restoration design, then a patient-specific matrix is made to help transfer digital design to the teeth using 3M dental composites. The Filtek matrix uses additive composite techniques where little to no tooth reduction is needed. According to 3M, dentists reported using the matrix boosted confidence, delivered predictable and aesthetic results, and saved chair time.
November saw the release of 3M HIS’ Ambulatory Potentially Preventable Complications (3M AM-PPCs) software for safety and quality oversight of procedures performed in outpatient settings or ambulatory surgery centers. The software uses sophisticated grouping logic and lets providers and payers identify and analyze complications in outpatient settings by specific procedures, service lines, providers, and facilities. National benchmarks are also included. The data analysis seeks to offer insights into safety areas with the best opportunities for qualities and excess cost improvements.
Finally, around the winter holidays last year, 3M announced its pledge to cease per- and polyfluoroalkyl substance (PFAS) manufacturing and work to discontinue use of PFAS in its products by 2025’s end. The company will discontinue manufacturing all fluoropolymers, fluorinated fluids, and PFAS-based additive products. This move was made to reflect regulatory trends to reduce or eliminate presence of PFAS in the environment, as well as evolving stakeholder expectations. According to 3M, current annual net sales of manufactured PFAS are about $1.3 billion, with estimated EBITDA margins of about 16%.
$8.42 Billion
Prior Fiscal: $9.05 Billion
Percentage Change: -6.9%
R&D Expenditure: $5.4B (total)
Best FY22 Quarter: Q1 $8.8B (total)
Latest Quarter: Q1 $8.0B (total)
No. of Employees: 92,000 (total)
Global Headquarters: Saint Paul, Minn.
KEY EXECUTIVES:
Michael F. Roman, Chairman & CEO, 3M
Monish Patolawala, Exec. VP, Chief Financial and Transformation Officer, 3M
John Banovetz, Exec. VP, Chief Technology Officer and Environmental Responsibility
Jeff Lavers, Group President, Health Care
MPO aims to identify lofty trends for 2022’s top 30 medical device companies, and spinning off medical device/healthcare divisions into pure-play, standalone firms might fly above the rest. 3M followed this trend with the proclamation of spinning off its Health Care business last July. The new 3M will remain a global material science company for industrial and consumer end markets, and Health Care will become a global, diversified, healthcare technology company with a focus on wound care, healthcare IT, oral care, and biopharmaceutical filtration.
“Disciplined portfolio management is a hallmark of our growth strategy,” 3M chairman and CEO Mike Roman said in a press release announcing the spinoff. “Our management team and board continually evaluate the strategic options that will best drive long-term sustainable growth and value. The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities.”
According to 3M, Health Care is expected to be spun off with net leverage of about 3.0 - 3.5x EBITDA and be positioned for rapid deleveraging. Further, “New 3M” intends to keep a stake of 19.9% in Health Care, which will be monetized over time.
3M Health Care posted $8.42 billion of revenue last fiscal year, dropping just shy of 7% from the previous year. According to 3M’s annual report, sales grew in separation and purification, health information systems, food safety, and medical solutions, while oral care proceeds were flat. COVID-related trends on elective procedure volumes and ongoing inflationary pressures also continued to impact growth. Sales were also lost year-on-year related to divestiture from the Food Safety Division split-off transaction and combination with Neogen completed in Q3 2022. Operating income margins fell due to increased raw materials and logistics costs, along with manufacturing productivity headwinds.
ANALYST INSIGHTS: When 3M Health Care is spun off from its parent 3M organization later this year, expect positive things to happen for this currently stodgy company. I expect 3M in 2024 to behave similar to GE HealthCare in 2023—engaging in new growth strategies organically and inorganically in an aggressive manner.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
3M released its latest medical adhesive, the Spunlace extended wear adhesive tape on liner, 4576, in April. The flexible, conformable acrylate-based adhesive is meant for extended wear devices needing attachment to the skin for an up to a 21-day wear time, both in and out of care facilities.
3M Health Information Systems (HIS) earned fully authorized Federal Risk and Authorization Management Program (FedRAMP) status for its 3M RevCycle health services platform (RHSP) in September. 3M RHSP hosts and supports critical operations 3M HIS offers, including natural language processing support for medical coding, clinical documentation integrity, clinician input and medical coding edits, self-service reporting, and evaluation and management. For care service providers, FedRAMP offers standardized security framework for cloud products and services recognized by executive branch federal agencies.
Also in September, 3M HIS revealed its 3M M*Modal Fluency Direct and medical necessity solutions will be available in Epic’s new Garden Plot. The software is available to independent medical groups with 40+ providers via a hosted, supported Software-as-a-Service (SaaS) model. The work will create a pathway to deliver 3M content and tech to end-users through an electronic health record.
3M finished sale of rights to its Neoplast and Neobun brands, as well as related assets in Thailand and other Southeast Asia countries, to Selic Corp. Public Company in October. These products were mainly part of 3M’s Skin Health & Wellness business: sports and medical tapes, bandages, and medicated products for the consumer and healthcare industries. According to 3M, the sale did not have a material impact on financial results but was a portfolio management move.
The company’s V.A.C. Therapy negative pressure wound therapy (NPWT) reached the clinical evidence milestone of 2,000 published, peer-reviewed studies in October as well, making it the only NPWT solution to achieve this honor. V.A.C. Therapy, according to 3M, accounts for over 75% of published NPWT clinical evidence. Last year, 3M also rolled out the first-ever silicone-acrylic hybrid drape for V.A.C. Therapy—3M Dermatac Drape—which was engineered to be gentle on skin and easy for clinicians to use.
Rounding out October was 3M Oral Care’s introduction of the 3M Filtek matrix, a restorative solution for dental composite placement. The procedure starts with a digital restoration design, then a patient-specific matrix is made to help transfer digital design to the teeth using 3M dental composites. The Filtek matrix uses additive composite techniques where little to no tooth reduction is needed. According to 3M, dentists reported using the matrix boosted confidence, delivered predictable and aesthetic results, and saved chair time.
November saw the release of 3M HIS’ Ambulatory Potentially Preventable Complications (3M AM-PPCs) software for safety and quality oversight of procedures performed in outpatient settings or ambulatory surgery centers. The software uses sophisticated grouping logic and lets providers and payers identify and analyze complications in outpatient settings by specific procedures, service lines, providers, and facilities. National benchmarks are also included. The data analysis seeks to offer insights into safety areas with the best opportunities for qualities and excess cost improvements.
Finally, around the winter holidays last year, 3M announced its pledge to cease per- and polyfluoroalkyl substance (PFAS) manufacturing and work to discontinue use of PFAS in its products by 2025’s end. The company will discontinue manufacturing all fluoropolymers, fluorinated fluids, and PFAS-based additive products. This move was made to reflect regulatory trends to reduce or eliminate presence of PFAS in the environment, as well as evolving stakeholder expectations. According to 3M, current annual net sales of manufactured PFAS are about $1.3 billion, with estimated EBITDA margins of about 16%.