In its Q3 earnings reports, medical device developer 3M revealed that it has pushed back the spinoff date of its healthcare division to the first half of 2024.

Once complete, the healthcare business will be a separate company worth over $8 billion, developing solutions in wound care, healthcare IT, oral care, and biopharma filtration. 3M, which announced the spinoff in 2022, says that the new business will be better able to tailor capital allocations, invest in growing areas of interest, and appeal to more diverse investors.

Originally aiming to complete the separation by the end of 2023, 3M said in its Q2 earnings call in July that it expected to spin off by year-end 2023 or early 2024 due to needing IRS, board, and other government agency approvals to make the transaction tax-free. With this most recent announcement, it has now created a wider timespan for completing the transaction.

In a live call to discuss the company's Q3 earnings, chairman and CEO Mike Roman said the spinoff was “progressing” and that the company does not expect “any hurdles,” but “a lot of work to do.”

In August, it appointed Bryan Hanson to be the CEO of the healthcare business once it becomes a stand-alone company. Hanson previously led medical device company Zimmer Biomet, where he oversaw the spinoff of its spine and dental device businesses as ZimVie in 2022.

Carrie Cox, who has been an advisor to 3M, will be the chair of the board of directors for the company. She is currently the chairman of the board of pharmaceutical company Organon and on the boards of Cardinal Health, Selecta BioSciences, and Texas Instruments. She previously was chairman and chief executive officer of biotechnology business Humacyte.

3M is building executive and board teams and “working through system changes, standing up legal entities, as well as all the regulatory filings that we need to do,” said Monish Patolawala, company president and chief financial officer.

3M will initially have a less than 20% stake in the healthcare company following the spinoff but will sell it off over time. The company is also moving forward with scheduled layoffs and restructuring initiatives that will streamline its workflow and reduce structural costs.

In Q3, it saw revenue declines, with net sales at $8.3 billion, down 3.6% from the same time last year. Healthcare made the most of any of its businesses but still had year-over-year declines with a 0.2% drop in quarterly sales that amounted to under $2.1 million. Year-to-date sales for the division fell 3.5% at $6.2 billion, compared to about $6.4 billion the year prior.

Much of the loss was attributed to a one-time, pre-tax $4.2 billion charge it will pay as part of a $6 billion settlement for thousands of injury lawsuits from the sale of faulty earplugs to the U.S. military. This, along with a proposed 13-year, $10.3 billion settlement with public water systems in the U.S. for testing and cleaning up per-and polyfluoroalkyl substances (PFAS), which have been labeled as so-called “forever chemicals”, resulted in a loss of nearly $2.7 billion of its $8.3 billion in sales for the quarter.

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