SOLV · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

Solventum Corp · 2026-11-05 · Importance 43 · Surprise 32

Cost of product increased to 53.8% of sales of product in the third quarter of 2026 from 53.1% a year earlier, primarily because of freight, warehousing and other costs supporting the July U.S. ERP deployment. For the first nine months, cost of product declined to 51.1% from 52.4% of sales of product, primarily reflecting $100 million of IEEPA tariff refunds. Inflation and incremental new tariff activity partly offset the nine-month improvement, while savings programs provided a partial offset. Cost of software and rentals decreased as a share of sales in both the quarter and nine-month period, driven by price and product mix.

Key facts

• Cost of product as a percentage of product sales decreased in the first nine months of 2026, primarily because Solventum received $100 million of IEEPA tariff refunds; inflation and incremental new tariffs were partly offset by savings programs. source
• Cost of product as a percentage of product sales increased in third-quarter 2026, primarily because of additional freight, warehousing and other costs related to Solventum's U.S. ERP deployment. source
• Cost of software and rentals as a percentage of sales decreased in both the third quarter and first nine months of 2026, driven by price and product-mix benefits. source