3M announced Tuesday it will spin off its health-care business into a separate publicly traded company.
The new business will focus on wound and oral care, health-care IT and biopharma filtration, the material science company said in a release. That includes products like its bandages, skin adhesives, oral aligners, air purifiers and optical lenses.
The company’s health-care products also include the Bair Hugger surgical warming system, which is currently the subject of nearly 6,000 lawsuits. 3M maintains that the product has no relation to surgical-site infections.
3M health-care products recorded more than $8 billion in sales in 2021. The transaction is expected to be completed by the end of next year, and 3M will maintain a 19.9% stake in the new company.
The announcement comes as 3M said its second-quarter revenue fell nearly 3% to $8.7 billion. Net income dropped to $78 million from $1.5 billion a year earlier, including a $1.2 billion pretax charge tied to resolving litigation related to Combat Arms Earplugs.
The company said Aearo Technologies, its subsidiary that produces Combat Arms Earplugs, filed for chapter 11 bankruptcy proceedings to establish a trust to resolve all legal claims related to the product. 3M said it believe the earplugs were safe and effective when used properly, but that they nevertheless face increasing litigation.
After excluding that one-time charge, 3M earned $2.48 per share. The performance topped expectations. According to Refinitv, analysts expected 3M to earn $2.42 per share on revenue of $8.58 billion.
Shares of the company closed up 5% at $140.82.
3M is also simultaneously spinning off its food safety business. That branch will merge with Neogen and is expected to be divested by September.
— Reuters contributed to this report.