3M Healthcare Spin Will Make Medical Device History

In just 7 business days, Solventum will split from 3M, creating a new publicly traded healthcare company.

“This is not a small business. This will be in the top three spins in medical device history,” said Bryan Hanson, a veteran medtech executive tapped to serve as CEO of the new company.

The 3M healthcare businesses that will make up Solventum on April 1 generated $8.2 billion of revenue last year. That puts this spin alongside such historic industry spins as Covidien from Tyco and Abbott’s biopharma spin into Abbvie.

Ahead of the opening bell on April 1, it appears that Solventum already has the key ingredients of a successful spinoff: a CEO with a strong track record involving large medtech spinoffs and mergers; a savvy leadership team representing a healthy mix of long-time 3M leaders as well as experienced newcomers to support the spin; a stable, diversified business comprised of strong sub-brands that will survive the spin without having to leverage the 3M name; and opportunities to close portfolio gaps and address challenges (eventually) through M&A.

Hanson at the helm

In the past five years, Hanson has earned a reputation as a turnaround titan in medtech. When he took the helm at Zimmer Biomet in December 2017, the company had been struggling with quality control and supply chain problems for at least a year. Not only did he lead Zimmer Biomet back to positive market share growth, earning back trust from its customer base and winning new business along the way, but Hanson managed to transform the company culture.

Zimmer closed on its $14 billion Biomet acquisition in June 2015, but the workforce still saw itself as two organizations rather than one integrated company until Hanson came along.

“This was a company that, when I started, hadn't really integrated Biomet and didn't have a clear purpose, a singular purpose,” Hanson said. “I brought that team together ... we went from 0% growth to mid-single digit growth over that 5.5-year period of time.”

Hanson was also directly involved in Covidien spinning out of Tyco, which he said has a lot of similarities to Solventum spinning out of 3M. From there, he was part of the largest acquisition in medical device history when Medtronic acquired Covidien, and he played a key role in that integration. Later, Hanson led a major divestiture when Medtronic sold its medical supplies business to Cardinal Health.

As strong as Hanson’s reputation is, he knows as well as anyone that he can’t do a spinoff of this size on his own. He has recruited an impressive leadership team to support the spin, comprised of both long-term 3M business leaders and experienced medtech leaders he recruited outside of the company.

Wayde McMillan, a former Covidien and Medtronic executive, has been named CFO of the new company. Chris Barry, who previously served as CEO at NuVasive (now part of Globus Medical) and also has leadership ties to Covidien and Medtronic, will serve as executive VP and group president of the medical solutions division for the new company. Garri Garrison, a long-time business leader at 3M, will serve as president of health information systems at Solventum. Vaughn Grannis, another longtime 3M leader, will lead the separation and purification sciences division. And last but not least, Karim Mansour will lead the company’s dental division.

Value-Creation opportunity

Perhaps the most important takeaway from Solventum's first investor presentation is that the new company will have value-creation opportunities.

"I absolutely see a pathway to unlocking, through the spin, significant value creation. There's no question," Hanson said.

He added that he would not have taken the gig if he didn't believe in the value-creation opportunity.

The new company will have a great starting position, he said, "better than most spins."

But he also acknowledged the challenges ahead, such as the distractions the leadership team will face as they navigate the separation from 3M.

"I'm also a realist because I've done this a few times and it's going to take time, and we have some challenges that we have to overcome," Hanson said. "So, think about this in years, not months."