Brandon Vazquez

Brandon Vazquez asked about the potential upsides and risks to Envista's 2026 guidance, specifically regarding top-line and bottom-line performance, considering the company's recent momentum.

Answer

CEO Paul Keel discussed three upsides (momentum, diagnostics market improvement, consumables franchise growth, and potential for higher pricing) and two risks (macro volatility and China VBP timing uncertainty) for growth. CFO Eric Hammes detailed tailwinds (core growth, productivity, Spark momentum, FX) and headwinds (tariffs, China margin impact, continued investments) for EBITDA growth, and also addressed the tax rate outlook.

Brandon Vazquez asked about the potential upsides and risks to Envista's 2026 guidance, particularly for top-line and bottom-line performance, given the company's strong momentum exiting 2025. He also inquired about the future trajectory of the company's tax rate.

Answer

Paul Keel, President and Chief Executive Officer, outlined growth upsides including sustained momentum, potential market improvement in diagnostics and consumables, and pricing flexibility if inflation persists. Risks included macro volatility and the uncertain timing of China's VBP. Eric Hammes, Chief Financial Officer, detailed EBITDA tailwinds from core growth, productivity, Spark's momentum, and favorable FX, while noting headwinds from tariffs, China's VBP, and continued investments. He also explained that the 2026 non-GAAP tax rate is projected at 28%, a significant improvement, with future reductions primarily dependent on continued U.S. profit improvement, debt paydown, and geo mix benefits.

Brandon Vazquez asked for the relative size of Envista's China business, particularly premium implants, to better understand tariff impacts, and also inquired about the company's tax structure.

Answer

President and CEO Paul Keel stated that China represents a high-single-digit percentage of total revenue, with premium implants being the largest component. He confirmed Envista is currently shipping to China and incurring tariffs while transitioning its supply chain. CFO Eric Hammes added that the full-year tax rate guidance remains 37%, as potential tariff impacts on U.S. income could offset the favorability seen in Q1.

Brandon Vazquez asked to distinguish the drivers of the implant business's improvement between market trends and commercial execution, and also requested details on Spark's path to profitability.

Answer

CEO Paul Keel attributed the implant business's recent improvement primarily to internal execution, including investments and leadership changes, rather than a broader market recovery. For Spark, he stated that the path to profitability in H2 2025 is mainly driven by controllable factors like manufacturing automation and lean processes, with potential upside from volume and pricing.

Brandon Vazquez inquired about the stability of end markets and the assumptions for 2026 guidance, specifically regarding international and American markets. He also asked about the early stages of the DSO adoption curve and the potential for continued double or triple-digit growth within this segment.

Answer

President and CEO Joseph Hogan stated that the company is projecting execution similar to the second half of the year, leveraging global penetration and early teen patient growth. CFO John Morici clarified that the forecast assumes markets will behave as they are, with growth driven by Align's active conversion approach. Joseph Hogan further explained that DSO growth is fueled by their increasing market share and Align's ability to scale treatment planning, distribution, and product portfolio, indicating continued strong growth parameters.

Brandon Vazquez asked for clarification on the assumption of stable end markets in the 2026 guidance, particularly for international and American markets. He also inquired about the adoption curve and growth potential within Dental Service Organizations (DSOs), noting some DSOs achieved triple-digit growth.

Answer

President and CEO Joseph Hogan stated that the company is projecting execution consistent with the second half of the year, leveraging early teens products and global penetration, with DSOs being a natural partner due to Align's scalability. CFO John Morici added that the forecast assumes market behavior remains consistent, focusing on active conversion strategies. He also noted DSOs represent about 25% of Align's business volume and are increasingly adopting digital orthodontics.

Brandon Vazquez asked about the apparent decoupling of Align's strong business performance from declining consumer sentiment, and what confidence this provides for the company's forward-looking guidance.

Answer

President and CEO Joe Hogan responded that the strength was broad-based, citing strong Clear Aligner volume growth across North America, APAC, and Europe. He highlighted that both teen and adult patient segments grew, and the iTero Lumina scanner with new restorative capabilities is providing a tailwind. Hogan emphasized the breadth of growth across product lines, geographies, and customer segments.

Brandon Vazquez asked about the adoption curve of the Invisalign Palatal Expander (IPE) one year post-launch and its potential as a teen market catalyst, as well as the durability of international growth.

Answer

CEO Joe Hogan stated that IPE's adoption is tracking similarly to Invisalign First, with strong patient feedback. He attributed durable international growth to a mix of early-stage penetration in some markets and continued expansion in others like Latin America, supported by better economic conditions and new technology rollouts.

Brandon Vazquez inquired about the current macroeconomic backdrop, asking if conditions have worsened compared to the prior year and what the top-line outlook for 2025 might be if market conditions remain stable.

Answer

CEO Joe Hogan explained that Q3 is always a challenging quarter due to seasonality, particularly in Europe. He noted that the U.S. market is most affected by the sluggish environment. Hogan stated that the issue is more external, linked to consumer confidence, rather than internal, and any improvement in economic activity would be positive for Align.

Brandon Vazquez asked for an update on IDEXX's software business, particularly pet owner-facing solutions like Vello, and their contribution to results. He also questioned if these software solutions help offset market weakness and improve portfolio pull-through. Additionally, he inquired if the 2026 guidance implies consistent utilization metrics and if there are further opportunities to boost utilization through innovation, especially with inVue Dx's controlled launch and corporate account penetration.

Answer

President and CEO Jay Mazelsky highlighted the software business as a strong strategic growth driver, noting double-digit growth in cloud-based PIMS placements and excellent traction for Vello, which leads to fewer no-shows, more clinical visits, and increased diagnostics usage. EVP and CFO Andrew Emerson confirmed solid double-digit growth in recurring software revenue. Emerson stated that the 2026 guide, with a 100 basis point improvement in CAG Diagnostics recurring growth, is largely volume-driven, supported by strong utilization and innovation benefits. He confirmed the controlled launch of FNA and ongoing inVue placements in corporate accounts, targeting 5,500 inVue placements for 2026.

Brandon Vazquez asked for an update on software innovation, particularly pet owner-facing tools like Vello, and their contribution to results. He also questioned if these software solutions help offset end-market weakness and improve portfolio pull-through in accounts using them. Additionally, he asked if the utilization metric is expected to remain largely consistent through 2026 and if there are further opportunities to push utilization higher from innovation benefits.

Answer

CEO Jay Mazelsky highlighted software as a strategically important business with strong growth and profitability, noting double-digit growth in cloud-based PIMS placements. He stated that Vello is gaining excellent traction, leading to fewer no-shows, more clinical visits, and increased diagnostics usage in customer accounts. CFO Andrew Emerson added that Vello expanded its users by about 40%. Andrew Emerson clarified that the 2026 guide includes a 100 basis point improvement in CAG Dx recurring growth, largely volume-driven by customer base expansion and strong utilization metrics, with FNA contributing in 2026.

Brandon Vazquez inquired about CancerDx's effectiveness in penetrating competitive accounts within the reference lab market, asking if it serves as a 'foot in the door' to gain more share and what the commercial process and timeline for this might look like.

Answer

Jay Mazelsky, President and CEO, stated that CancerDx is a key differentiator in IDEXX's broad reference portfolio. He highlighted that approximately 17% of CancerDx test submissions come from competitive reference lab customers, which provides an opportunity to reintroduce IDEXX's offerings and elevate the standard of care for these pets.

Brandon Vazquez asked about IDEXX's ability to leverage CancerDx to penetrate competitive reference lab accounts and gain market share, inquiring about the commercial process and its expected duration.

Answer

Jay Mazelsky, President and CEO, highlighted CancerDx as a key differentiator within IDEXX's broad reference portfolio. He noted that approximately 17% of CancerDx test submissions come from competitive reference lab customers, providing a significant opportunity to reintroduce IDEXX and its reference lab services to these accounts.

Brandon Vazquez asked about intra-quarter wellness visit trends for April and sought to understand the drivers behind the resilient diagnostic utilization growth despite macro pressures, questioning its durability through 2025.

Answer

Executive Andrew Emerson declined to comment on intra-quarter metrics for April but reiterated the Q2 guidance, which assumes clinical visit trends similar to the full-year outlook of a ~2% decline. He emphasized that the strong diagnostic frequency and utilization are key, resilient aspects of their strategy, reflecting pet owners' continued willingness to invest in their pets' health even amid broader economic pressures.

Brandon Vazquez asked what levers IDEXX can pull to improve diagnostic frequency and utilization to offset weaker vet visit growth. He also sought clarification on whether the headwind from new pain medications is a visit volume distortion or if it implies fewer diagnostics are being performed.

Answer

Executive Brian McKeon clarified that the pain medication trend inflates total visit counts with visits that have a low diagnostic attachment rate, making the underlying trend for diagnostic-driving visits weaker than the headline number suggests. However, he noted that diagnostic frequency per 'real' visit is actually up. CEO Jay Mazelsky identified innovation, like the new inVue analyzer, and the company's commercial model, such as IDEXX 360 programs, as the key strategic levers to drive higher utilization over time.

Brandon Vazquez asked for an update on the investments in the PCP channel over the past year, the company's excitement about it, its meaning for device growth, and key metrics for positive ROI.

Answer

CEO Mick Farrell highlighted the success of 60,000 CME trainings for PCPs, noting strong demand for knowledge and a high percentage of providers intending to change clinical practices. He explained how these efforts guide PCPs through screening, home sleep apnea testing, and referral pathways, supporting the gold standard therapy.

Brandon Vazquez inquired about the outcomes and excitement surrounding ResMed's investments in the Primary Care Physician (PCP) channel over the past year, its implications for device growth, and key metrics for investors to track ROI.

Answer

CEO Mick Farrell highlighted 60,000 CME trainings for PCPs, a 50% increase in the quarter, as a strong indicator of demand for knowledge. He explained how these trainings educate PCPs on screening, referral pathways, and gold standard therapy, leading to prescriptions and digital platform integration with doctor systems.

Brandon Vazquez asked about the OpEx growth expectations for 2026, specifically if the 10% growth mentioned was for the full year or just the quarter, and whether there's a tail on current investments or if double-digit OpEx growth should be modeled, inquiring if these investments can be modulated. He also asked if, given the helpful slide on tailwinds and headwinds for 2026, it's safe to assume an acceleration of the business into the next year.

Answer

Bob VanHimbergen, CFO, clarified that the 10% OpEx growth was for Q4 2025, not the full year. He stated that investment decisions would continue to be data-driven. VanHimbergen highlighted Elanco's operational excellence in G&A, which is down year-over-year, while strategically leaning into R&D, DTC, and marketing spend. He expects this trend to continue, supported by the Elanco Ascend program. Regarding 2026, VanHimbergen affirmed that with strong market fundamentals, well-performing products, and current momentum, Elanco anticipates top-line growth, EBITDA growth, and EPS growth.

Brandon Vazquez from William Blair asked about the expected OpEx growth for 2026, specifically if the double-digit growth seen in Q3 2025 would continue, and if Elanco expects an acceleration of its business into 2026 based on the outlined tailwinds and headwinds.

Answer

CFO Bob VanHimbergen clarified that the 10% OpEx growth was for Q3, not the full year, and that future investment decisions would be data-driven. He emphasized operational excellence in G&A (already down year-over-year) and continued investment in R&D and marketing, driven by the Elanco Ascend program. He confirmed strong market fundamentals and momentum, leading to expectations of top-line, EBITDA, and EPS growth in 2026.

Brandon Vazquez asked for the top three revenue contributors within the innovation bucket for 2025 and also inquired about the macro environment and consumer spending trends for the rest of the year.

Answer

CFO Todd Young identified Experior as the single largest dollar contributor to the innovation bucket. CEO Jeff Simmons added that innovation products are strengthening the base portfolio and emphasized that Elanco is an 'execution story,' not dependent on pet visit trends, highlighting the positive macro trend of rising animal protein consumption.

Brandon Vazquez of William Blair inquired about potential changes to the sales force compensation structure in 2025 to ensure the entire new product portfolio is effectively promoted. He also asked about the growth durability of the Seresto and Advantage retail portfolio, which was up significantly year-to-date, and its outlook for 2025.

Answer

CEO Jeff Simmons explained that sales rep incentives are a key focus and will be biased towards new products like Zenrelia and Credelio Quattro, supported by investments in digital tools for next-generation commercial engagement. CFO Todd Young addressed the retail portfolio, noting that while Seresto has had a strong year, the 7% growth is elevated due to a bounce-back in Spain. He guided towards a more normalized low single-digit growth expectation for the portfolio, with AdTab being a positive contributor.

Brandon Vazquez asked about the lessons learned from Librela's launch challenges, particularly social media impact, and how these learnings will be applied to the upcoming Linivi and Portela launches in 2026 to ensure a more successful ramp and support the long-term organic growth target.

Answer

Kristin Peck, Chief Executive Officer, expressed satisfaction with Linivi and Portela approvals and confirmed that learnings from Librela's launch will be applied. For new launches, Zoetis will prioritize early experience with specialists, raise awareness of osteoarthritis as a serious progressive disease, deepen education with specialists and veterinarians, and invest in long-term Phase 4 research. She highlighted Linivi's convenience (three-month administration), market expansion potential, and different NGF targeting, expecting incremental revenue despite some Librela cannibalization. Portela for feline OA pain is also expected to expand the market, especially given cat visit growth driven by Solensia.

Brandon Vazquez from William Blair asked about the lessons learned from Librela's launch, particularly regarding social media impact, and how Zoetis plans to apply these learnings to ensure a more successful ramp-up for the new long-acting OA drugs, Linivi and Portela, to support the 6%-8% organic growth target.

Answer

CEO Kristin Peck expressed excitement for Linivi and Portela approvals and outlined a strategy to apply Librela's learnings. This includes starting with early experience and education for specialists, raising awareness of OA as a serious, progressive disease, and investing in long-term Phase IV research. She highlighted Linivi's convenience (three-month administration) and different mechanism of action to expand the market, while Portela is expected to drive growth in the feline OA market, where Solensia is already contributing to increased cat visits.

Brandon Vazquez sought more detail on the Librela slowdown, asking what specific feedback veterinarians are providing and what data they need to re-accelerate adoption. He also requested more granular updates on the pipeline innovations expected over the next 12 to 18 months.

Answer

CEO Kristin Peck explained that while pet owner satisfaction with Librela is high, vets have requested more data to confidently address perceived risks and drive recommendations. She confirmed that third-party studies are underway to provide this validation. Regarding the pipeline, she reiterated expectations for a major market approval every year, highlighting opportunities in large markets like renal and oncology, but provided no new specific updates.

Brandon Vazquez questioned if weakening consumer sentiment was affecting compliance for Librela and the broader portfolio. He also asked for the expected mix of price versus volume for the remainder of the year.

Answer

CEO Kristin Peck acknowledged a more measured consumer approach to chronic care costs but emphasized the overall resilience of the animal health industry and Zoetis's diverse portfolio. CFO Wetteny Joseph stated the price/volume mix is consistent with prior expectations, with price moderating from recent highs and volume remaining a key growth driver, similar to the Q1 mix of 4% price and 5% volume.

Brandon Vazquez asked about the board's approval for KKR to increase its stock ownership up to 19.9%, seeking insight into the impetus behind this decision, the nature of conversations, and whether this increased stake implies a more 'intimate' partnership leading to more meaningful strategic changes for Henry Schein.

Answer

Stanley Bergman, Chairman and CEO, explained that KKR initiated the request due to their appreciation for the company and the dental space. He stated that the board's decision was based on the value KKR sees in Henry Schein's future potential, not on specific promises. He highlighted KKR's Capstone Group's involvement in selecting consulting firms, providing input on best practices, and assisting with indirect spending, describing it as a very good and helpful relationship.

Brandon Vazquez sought to confirm if the organic growth expectation embedded in the full-year guidance had changed. He also asked for commentary on performance and sentiment among Dental Service Organizations (DSOs).

Answer

CFO Ron South confirmed that the organic growth expectations within the full-year guidance are 'largely consistent' with what was originally anticipated. CEO Stanley Bergman described the DSO segment as 'stable to leaning positively,' noting that well-financed DSOs are expanding and have generally adjusted to the higher interest rate environment.

Brandon Vazquez of William Blair sought clarification on normalizing compensation, the impact of potential tariffs on 2025 guidance, and the extent to which Henry Schein's own branded products can fulfill customer needs.

Answer

CFO Ron South clarified the compensation comment referred to management incentives, not sales commissions. On tariffs, he stated the company is well-positioned due to supply chain shifts. CEO Stanley Bergman explained their hybrid model includes a corporate brand alternative for most consumables and that they expect gross profit to increase from both specialty and their own brand products.

Brandon Vazquez asked for elaboration on comments about dental manufacturers needing to 'compete a little bit more' on price. He also requested more color on the specific restructuring activities within the clear aligner business.

Answer

Stanley Bergman, CEO, clarified that consumers are value-conscious, and some manufacturers who raised prices significantly are facing resistance, a trend the company has noted for several quarters. Ron South, CFO, explained the company is transitioning its clear aligner offering from the Reveal brand to the Smilers brand and restructuring the orthodontic business to better leverage its existing distribution infrastructure, as the unit had not achieved sufficient scale.

Brandon Vazquez asked about the narrowing gap between volume and pricing growth, seeking quantification of the annual revenue per patient in the U.S. and insights into future pricing trends and when declines might stabilize.

Answer

Jereme Sylvain, CFO, confirmed the analyst's estimated annual revenue per patient ($1,400-$1,500) is in the general ballpark. He clarified that year-over-year price impacts within channels are minimal (2-3%); the primary driver of revenue per patient changes is channel mix, which has been stabilizing. He noted that new Type 2 non-insulin coverage comes via pharmacy, while potential CMS Type 2 coverage would come via DME, influencing future mix.

Brandon Vazquez asked about quantifying the closing gap between growth in volume and pricing, specifically the annual revenue per patient in the U.S., and how pricing trends will level out.

Answer

Jereme Sylvain, CFO, confirmed that the analyst's estimate of $1,400-$1,500 annual revenue per patient in the U.S. is in the general ballpark. He clarified that year-over-year price changes are minimal (2-3%), with mix being the primary driver due to shifts to pharmacy. He expects mix to stabilize, but future coverage (e.g., Type 2 NIT via pharmacy or CMS via DME) could shift it again. Price is not the challenge; mix has stabilized.

Brandon Vazquez from William Blair & Company, L.L.C. asked about the upcoming 15-day G7 launch, focusing on how payer discussions are progressing and whether the goal is to maintain a similar annual revenue per patient as the 10-day sensor.

Answer

EVP & CFO Jereme Sylvain confirmed that payer negotiations are structured around a monthly cost of therapy, which translates to an annual reimbursement figure. He stated that Dexcom is taking the exact same approach with the 15-day sensor, with the expectation of achieving a similar annual revenue per patient.

Brandon Vazquez with William Blair inquired about CEO Mike Nassif's initial assessment of Neogen's differentiated assets and strengths, particularly in light of execution challenges and competitor claims of market share loss. He also asked about the commercial strategy for gaining market share with unique products like PetriFilm and sought clarification from CFO Dave Naemura on the expected progression of EBITDA margins and the impact of OpEx reductions on full-year guidance.

Answer

CEO Mike Nassif affirmed Neogen's strong portfolio in a growing market, highlighting dedicated employees and opportunities to streamline operations. He acknowledged share loss in specific areas due to supply issues but noted strong underlying demand for PetriFilm and growth in pathogens. Nassif outlined a three-pronged commercial strategy for share gain: leveraging Neogen's broad portfolio, targeting underpenetrated markets, and enhancing execution. CFO Dave Naemura confirmed expectations for EBITDA margin progression throughout the year, driven by seasonal volume improvements, reduced inventory write-offs, better sample collection performance, and the run-rate benefits of recent headcount reductions.

Brandon Vazquez asked about the new CEO's initial assessment of Neogen's differentiated assets, the pockets of strength that gave him confidence to join, and how the commercial organization plans to regain market share with unique products like Petrifilm. He also inquired about the expected progression of EBITDA margins and EBITDA throughout the fiscal year.

Answer

Mike Nassif (CEO, Neogen) highlighted the growing market, strong portfolio, and dedicated employees as key attractions, acknowledging share loss in some areas due to supply challenges but noting strong underlying demand for Petrifilm. He outlined a strategy for market share gains through Neogen's broad portfolio, targeting underpenetrated markets, and disciplined commercial execution. Dave Naemura (CFO, Neogen) confirmed expectations for EBITDA margin progression, citing anticipated improvements in inventory write-offs, sample collection performance, and the run-rate benefits from recent cost reductions.

Brandon Vazquez from William Blair & Company, L.L.C. asked if the macroeconomic environment was worsening sequentially, inquired about margin progression throughout the year given multiple headwinds, and questioned the level of stranded costs following the divestiture of the cleaners and disinfectants business.

Answer

CFO & COO David Naemura confirmed the macro environment softened through Q4 and that the company's guidance assumes this persists. He expects margins to be lowest in Q1 and improve sequentially due to seasonality and progress on operational inefficiencies. Regarding divestitures, Naemura noted that while most costs are direct, approximately $1.5 to $2 million in stranded costs will remain temporarily due to a transitional services agreement.

Brandon Vazquez asked about the drivers of the lowered guidance, questioning the split between macroeconomic pressures and internal execution. He also inquired about the impact of tariffs on margins versus sales volume, mitigation strategies, and the key factors to consider for the fiscal 2026 outlook.

Answer

CFO David Naemura explained that the guidance reduction was primarily due to macroeconomic softening, which accounted for about $4 million of the $6 million Q3 revenue shortfall. CEO John Adent added that while the core Food Safety business grew 7% excluding sample collection issues, it was below his double-digit expectations due to the market slowdown. Regarding tariffs, Naemura estimated a potential $30 million annual impact before mitigation, affecting both margins and volume, while Adent noted they can shift manufacturing to non-tariffed regions. For fiscal 2026, Naemura highlighted cost actions, portfolio changes, and temporary duplicate costs from the Petrifilm facility ramp-up as key factors.

Brandon Vazquez asked about the feasibility of achieving high 20% EBITDA margins with a shrinking revenue base, the risk of losing market share in sample handling due to production ramp-up delays, and the potential benefits for Neogen from an evolving food safety regulatory landscape.

Answer

CFO David Naemura affirmed that portfolio restructuring, such as in genomics, aims for a higher quality margin profile, even with lower revenue. CEO John Adent acknowledged the risk of share loss in sample handling but noted production should reach full capacity by the end of Q3. Adent also explained that long-term regulatory tailwinds are significant, comparing the ongoing need for food safety improvements to cybersecurity.

Brandon Vazquez from William Blair asked for a quantification of customer losses from recent shipping issues and what those customers require to return. He also questioned if Q1 results would lead to any change in the full-year guidance range, and requested early feedback on the new high-volume Petrifilm feeder and any potential impact from recent hurricanes.

Answer

CFO David Naemura quantified the share loss headwind at approximately $8 million in Q1, primarily in the U.S. CEO John Adent added that customer conversations are focused on rebuilding trust by demonstrating improved operational efficiency and consistent supply. Adent stated that the full-year guidance range remains unchanged due to uncertainties in the pace of share recovery and end-market conditions, reiterating the expectation for a stronger second half. He also shared a positive anecdote about the new Petrifilm feeder, while Naemura noted there was no quantification of hurricane impacts at this time.

Brandon Vazquez of William Blair & Company, L.L.C. asked for a breakdown of subscription business growth between pricing (ARPU) and pet volume for the second half of 2025 and into 2026. He also requested an update on the progress and potential U.S. launch timing for the PHI and Perkin products.

Answer

CFO Fawwad Qureshi detailed that of the 16% Q2 subscription revenue growth, approximately 11% came from ARPU and 5% from pet growth. He stated that for the second half of the year, pet growth is expected to become a larger contributor to revenue growth while ARPU's contribution lessens. CEO Margi Tooth added that the PHI and Perkin products have provided valuable learnings from the Canadian market, but the recent focus has been on the core, higher-LTV Trupanion product. These learnings position the company to deploy them in the U.S. market in the future as acquisition investment increases.

Brandon Vazquez inquired about recent business trends in April amid macro uncertainty and the strategy for improving conversion rates in underperforming territories with increased PAC spend.

Answer

CEO Margi Tooth stated that Q2 trends are continuing as expected with strong lead volume and no negative impact from the macro environment. She explained that improving conversion involves granular, territory-specific strategies focused on vet referrals and tailored messaging, funded by growing adjusted operating income.

Brandon Vazquez inquired about the expected progression of subscriber growth throughout 2025, the impact of increased Pet Acquisition Cost (PAC) spend, and the significance of the record number of active hospitals on vet lead volume.

Answer

CFO Fawwad Qureshi explained that PAC spend will increase gradually through 2025, aiming to approach 2022 levels, with pet count growth expected to accelerate in the second half of the year. CEO Margi Tooth added that Q4 vet leads were up 30% year-over-year, and the increased PAC investment is designed to convert this strong lead flow.

Brandon Vazquez asked about the expected sequential cadence of increased growth spending and how long it would take for that spending to impact the P&L. He also sought clarification on the commentary that veterinary inflation trends were more favorable in July before rebounding.

Answer

CEO Margi Tooth explained that after reducing spend for six quarters, it will take time for the ramp-up to gain traction, similar to the lag seen when spending was cut. She noted that while July's cost of care was lower, August and September were more aligned with prior trends, so the company is maintaining its 15% veterinary inflation assumption. The favorable July trend contributed to achieving the 71% value proposition ahead of schedule.

Brandon Vazquez from William Blair & Company asked for the new CEO's view on whether the U.S. business underperformance is due to internal execution or the macro environment. He also questioned if Dentsply needs to adjust its operating model for a prolonged period of market weakness.

Answer

CEO Dan Scavilla responded that it was too early to determine the exact split but believes strong execution can mitigate macro impacts. He stated the long-term goal is to generate strong cash flow and profitability, which will allow the company to not only react to but also shape the macro environment, rather than simply banking on a market recovery.

Brandon Vazquez inquired about the key operating metrics for DS Core that indicate success beyond user growth, and asked which business segments are the focus of the new customer experience improvement surveys.

Answer

CEO Simon Campion highlighted metrics like over 50,000 connected devices and 100,000 monthly lab orders as key indicators of DS Core's traction and stickiness. He clarified the new surveys are not segment-specific but are focused on the holistic customer journey, assessing pain points like invoicing, returns, and e-commerce usability to improve the overall experience of engaging with Dentsply Sirona.

Brandon Vazquez asked for clarification on the strategy for the Byte business, given the write-off of its brand name, and inquired about the future commercial strategy and resulting P&L implications.

Answer

CEO Simon Campion stated the company will focus exclusively on the SureSmile aligner product, redeploying Byte's demand generation and software development talent to enhance the SureSmile platform. Interim CFO Herman Cueto directed attention to the EPS bridge, noting the Byte resource reduction contributes positively to 2025 EPS, and clarified that Byte will remain a substantial sales headwind for the year.

Brandon Vazquez asked for a postmortem on why the implant business has underperformed expectations and what specifically needs to be fixed. He also inquired about the role of the new virtual sales team and when its efforts might benefit the P&L.

Answer

CEO Simon Campion attributed the implant business's struggles to internal execution failures, stating that the rate of new account acquisition has not offset historical declines, despite correct investments in sales and education. Regarding the new sales team, he said over 75 virtual reps have been hired and are beginning to contact customers. They will target the long tail of smaller accounts to increase wallet share, with a revenue impact expected to materialize in 2025.

Brandon Vazquez from William Blair & Company, L.L.C. asked about the rationale and timing for splitting the Chief Commercial Officer role and questioned if utilization trends show Aquablation becoming the standard of care in older accounts.

Answer

President & CEO Reza Zadno stated the commercial reorganization aims to strengthen execution for long-term growth by adding dedicated leadership for sales and marketing. EVP & CFO Kevin Waters confirmed that longer account tenure correlates with higher utilization and that Aquablation is the standard of care in some hospitals, but emphasized that with only 20% market share, there is still substantial room to grow.

Brandon Vazquez inquired about utilization dynamics within IDN accounts and whether a top-down corporate push leads to a clearer path to standardizing care. He also asked about the strategy for using the new WATER III trial data to influence society guidelines.

Answer

Executive Sham Shiblaq explained that while adoption remains surgeon-driven, IDN partnerships help by creating patient funnels through education and patient navigation programs, and confirmed IDNs are interested in standardizing care on Aquablation. Executive Reza Zadno stated that the positive WATER III data will be instrumental in getting Aquablation into international guidelines, further strengthening its clinical evidence.

Brandon Vazquez of William Blair questioned why Q1 2025 utilization guidance appeared flat year-over-year despite optimistic commentary on procedure rescheduling and new account launches. He also asked about the long-term durability of system placements as penetration in high-volume centers increases.

Answer

CFO Kevin Waters explained that flat Q1 utilization was heavily impacted by lingering saline shortage effects in January, but strong momentum in February and March implies a year-end utilization growth rate of around 20%. CCO Sham Shiblaq addressed placement durability, stating there is still a pipeline of over four years for high-volume greenfield accounts alone, not including other opportunities like medium-volume centers or second system sales.

Brandon Vazquez inquired about the percentage of sales reps trained on HYDROS and whether procedures are being lost or simply delayed. He also asked about the trend of selling second systems to existing accounts and its impact on the long-term market opportunity.

Answer

Executive Sham Shiblaq stated that while a specific percentage of trained reps would not be disclosed, the vast majority of new system launches are scheduled for Q4, implying most training will occur then. He asserted that procedures are being delayed to ensure proper launches, not lost to competitors. CFO Kevin Waters added that while some second systems were sold to key opinion leaders, the primary focus for 2024 remains on greenfield accounts, with a formal replacement cycle strategy to be discussed for 2025.

Brandon Vazquez inquired about the segmentation of utilization growth, asking if it grows linearly with account tenure or if other factors are at play. He also requested an update on the limited launch of the pediatric indication and its potential progression to a broader rollout.

Answer

CEO Jane Chao detailed that utilization growth is driven across three dimensions: expanding into new departments within a hospital, increasing the number of trained physicians, and driving protocolization for specific patient populations. Regarding the pediatric launch, Chao stated they are in a pilot phase, conducting quality improvement projects with key opinion leaders to refine workflows and inform the future go-to-market strategy.

Brandon Vazquez of William Blair asked about the productivity ramp of the new sales rep cohort and whether it was progressing in line with expectations. He also requested a deeper explanation of the reimbursement process, asking what specific difficulties exist with the current temporary code and how the transition to a Category I CPT code in January will improve the situation.

Answer

President and CEO Kevin Hykes confirmed that the new rep productivity is progressing as expected, with the company's focus now shifting from hiring to training and onboarding. He detailed that the move to a Category I CPT code is significant because it will eliminate automatic denials based on 'experimental' status, force human review for prior authorizations, and establish consistent, predictable physician payment, thereby reducing key adoption friction.

Brandon Vazquez from William Blair & Company, L.L.C. asked for more detail on why Epic EMR integrations are leading to increased patient volumes and where these incremental patients are originating from within health systems.

Answer

President and CEO Quentin Blackford stated that while still in early stages, accounts with Epic Aura integrations see an average prescribing increase of over 20%, with some as high as 40%. He explained that the streamlined workflow encourages broader adoption across departments and facilitates a single-vendor solution for both Zio Monitor and Zio AT. He noted that about 65% of iRhythm's EMR-integrated accounts use Epic, representing a significant opportunity.

Brandon Vazquez from William Blair & Company, L.L.C. inquired about the potential to re-accelerate the stroke market and whether the new sales force and products like Ruby XL mark a turning point for the embolization business.

Answer

CEO Adam Elsesser expressed optimism that new technologies like Thunderbolt could help reinvigorate the stroke market by simplifying procedures. He affirmed his hope that the focused investment in the embolization sales team and new products would indeed represent a significant positive turning point for that business segment.

Brandon Vazquez sought clarity on the remaining milestones for the Lima integration and the most promising cross-selling opportunities. He also asked about the specific mechanisms Enovis could use to offset potential tariffs.

Answer

CEO Matthew Trerotola explained that while major channel integrations are complete, the remaining work involves lower-risk back-office and operational projects. He identified both macro (e.g., AltiVate shoulder globally) and micro cross-selling opportunities. For tariffs, he outlined a playbook of inventory management, supply chain diversification, and eventual price/reimbursement adjustments.

Brandon Vazquez questioned the assumption that Q4 procedure volumes lost to hurricanes and IV shortages would not be recovered within the quarter. He also asked whether growth was coming more from new surgeon acquisition or deeper penetration with existing surgeons.

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CFO Phillip Berry explained that the impact extends beyond surgery to areas like bracing clinics, where revenue is less likely to be recovered. He also noted that packed end-of-year schedules might push rescheduled surgeries into next year. CEO Matthew Trerotola added that the company sees great opportunity in both adding new surgeons and increasing penetration with its installed base.

The analyst requested an update on the initial launch and reception of the SMART 28 system and asked about the milestones and timeline for improving gross margins back towards the 80% level.

Answer

The executive described a very strong and positive reception for SMART 28, emphasizing its value in improving surgical precision and planning. The CFO clarified that the company has moved away from an 80% gross margin target, now viewing ~75% as a floor from which they expect gradual, long-term improvement driven by cost and inventory initiatives.

Asked about the surgeon training, hardware compatibility (open vs. closed platform), and clinical data plans for the Smart 28 system. Also questioned the company's balance sheet and capital position given the cash flow positivity target is now 2026.

Answer

Management emphasized that Smart 28 was designed to be extremely easy to use to encourage broad adoption and provide surgeons with better diagnostic information while retaining intraoperative flexibility. On the balance sheet, they reiterated that achieving cash flow positivity by 2026 is a top priority and that all current operational efficiency initiatives are aimed at reaching this goal, expressing confidence in their capital position.

Asked whether future profitability improvements would come from top-line growth or further OpEx reductions. Also requested a comparison of the patient workflow and benefits between the previous HFX iQ system and the new HFX AdaptiveAI.

Answer

The company responded that they will continue to seek operational efficiencies, such as leveraging their Costa Rica facility and working capital management. A key driver of future leverage will be AI, which allows for top-line growth without a proportional increase in support staff. They explained that AdaptiveAI represents a major leap from HFX iQ by using the full capabilities of AI to automatically adjust therapy, significantly reducing the patient burden of device charging.

Inquired about the reasons for market share loss despite a strong product and data, and asked about the path to EBITDA profitability, questioning if it's solely volume-dependent or if other efficiencies can be realized.

Answer

The company attributes share loss to typical dynamics following competitor product launches and their larger portfolios, and plans to counter by using its own expanding portfolio (SI joint) offensively. Reaching EBITDA profitability requires revenue in the mid-$400M range; while cost efficiencies from Costa Rica and the higher-margin SI joint business will help, revenue growth is the primary driver.

Brandon Vazquez asked for any unique insights from the da Vinci 5 installed base, such as procedure types or utilization compared to Xi. He also inquired about the speed of the innovation cycle for software-based features versus traditional hardware development.

Answer

CFO Jamie Samath stated that it's too soon to draw conclusions on da Vinci 5 utilization versus Xi, as the installed base is not yet large enough for a robust comparison, but noted it is being used across a broad set of procedures. He explained that software innovation has two tracks: non-medical device software can have rapid cycles, while regulated software follows a longer, though still likely faster, cadence than major hardware changes. CEO Gary Guthart added that hardware innovation is not going away and remains a focus.

Inquired about the expected cadence of guidance for the remainder of the fiscal year, particularly how the company will move past the Change Healthcare headwinds. Also asked for more detail on the companion animal business strategy, specifically which segments are being deprioritized and whether this is an ongoing process.

Answer

The company expects earnings to be more heavily weighted to the second half of the year. The Change Healthcare impact will lessen, and they will lap the issue in Q4. Additionally, cost-saving and demand-driving initiatives will ramp up throughout the year, with the full impact felt in Q3 and Q4. The deprioritization in companion animal is focused on customer segmentation (focusing on higher-margin profiles) rather than market segments, and the impact from this is expected to moderate as the year progresses.