Brett Fishbin • KeyBanc Capital Markets

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Chairman and CEO Michael Petras explained that the Nelson Labs margin expansion was a result of ongoing execution on labor productivity, a favorable mix shift to core lab testing, and pricing discipline. Regarding the ETO rule extension, he stated Sotera Health is well-positioned, will continue its planned investments, and views the extension as an opportunity for optimal installation without altering its long-term competitive outlook.

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CEO Michael Petras attributed the Nelson Labs margin expansion to a favorable mix from new regulations, increased new product testing, and recovering sterilization volumes, alongside effective pricing and labor stability. For Sterigenics, he highlighted that bioprocessing has shown significant growth and that underlying trends across the core customer base are strong, supporting the outlook for continued volume improvement throughout 2025.

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CEO Michael Petras identified volume as the primary swing factor, stating that stronger-than-expected med device volume would position both Nelson Labs and Sterigenics for outperformance. For pricing, he indicated that within the 3-4% total company range, Sterigenics would be at the high end, while Nelson Labs and Nordion would be at the low end.

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CEO Michael Petras expressed satisfaction with Nelson Labs' performance, noting improvements in core testing volume and strong customer satisfaction scores. For the Investor Day, Petras outlined key goals: introducing division presidents, educating on the company's role in healthcare, and providing a long-range view on CapEx, revenue, free cash flow, and M&A strategy.

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Michael Tokich, Senior VP & CFO, attributed the higher tariff forecast to increased duties on metals like steel, aluminum, and copper, as well as policy changes in the EU. Daniel Carestio, President & CEO, explained that maintaining the AST guidance reflects general conservatism amid some customer manufacturing shifts in the MedTech space, while acknowledging the strong start to the year.

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President and CEO Daniel Carestio characterized STERIS's capital equipment as a non-discretionary 'utility' necessary for procedural growth, noting the order book remains strong. He also confirmed that AST capacity is not currently a limiting factor and that the company is well-positioned to accommodate higher industry growth.

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SVP and CFO Michael Tokich stated that the tariff situation is too fluid to provide directional guidance but noted that facilities in Canada and Mexico represent just under 10% of cost of goods sold. He quantified the year-over-year increase in legal expenses at just under $6 million for the quarter and projected another $5 million headwind in Q4, which is included in the forecast and recorded in corporate expenses.

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CEO Daniel Carestio attributed the Healthcare capital equipment shipment timing to weather-related delays but highlighted a very strong order backlog. He noted that higher-margin recurring revenues are offsetting this. CFO Michael Tokich confirmed the revised operating margin outlook is due to the underperformance in the AST segment but reiterated confidence in the long-term goal of margin expansion.

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Chairman & CEO George LeMaitre confirmed the $2 million full-year ArteGraft guidance, attributing the increase to strong early results in Europe and South Africa following recent approvals. CFO Dorian LeBlanc explained the Q4 margin ramp is driven by revenue seasonality, lower operating expenses in the second half as major investments are complete, and reduced regulatory expenses post-MDR.

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Executive Dorian LeBlanc confirmed that the guidance incorporates the annualized cost impact from Chinese tariffs, half of which is expected to be offset by price increases. CEO George LeMaitre and President Dave Roberts explained that the Aleutia agreement becomes an organic growth tailwind because the product's sales were declining; removing the prior year's sales from the organic calculation base mathematically helps the growth rate. It also allows reps to focus on core, higher-growth products.

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CEO George LeMaitre clarified the two parallel approval paths. The German process is back on track after a delayed auditor visit, with a 2025 approval anticipated. For Ireland, the government now requires a physical brick-and-mortar office, which LeMaitre is committed to establishing. He stated the company expects to receive at least one of the two approvals in 2025, which would then facilitate market access in other European countries.

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CFO Joseph Pellegrino attributed the lower R&D expense to a lighter quarter for regulatory spending related to MDR. CEO George LeMaitre identified the allograft (RFA) product, with 26% unit growth, and the XenoSure product line, with 10% unit growth, as the primary drivers of the overall unit volume increase.

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Chairman & CEO R. Jeffrey Bailly confirmed that the robotic surgery market is a strong fit, with seven customers in production and over a dozen in development, expecting meaningful revenue from top players within two years. He attributed the inorganic revenue shortfall to temporary labor inefficiencies at the AJR facility, which delayed shipments, but noted other acquisitions are performing well. Bailly also stated the AJR product transfer to the Dominican Republic will begin in Q4 2025.

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CEO Jeff Bailly attributed the growth in segments like infection prevention to new products and the end of customer destocking. He explained that acquisitions, particularly AJR, are growing faster now that they are part of UFP, with AJR securing more contracts. Executive Ronald Lataille quantified this, noting AJR's Q1 revenue was $29.2 million versus a ~$19 million quarterly run-rate at acquisition. Bailly added that the new robotic surgery programs will begin contributing modest revenue in late 2025, with a more meaningful impact expected in 2026.

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CEO Jeff Bailly attributed the 25%+ growth in segments like infection prevention and orthopedics to new product launches and the end of customer destocking. He explained that acquisitions, particularly AJR, are growing faster now as part of UFP, securing larger, exclusive contracts. CFO Ronald Lataille quantified this, noting AJR's Q1 revenue was $29.2 million versus a $19 million quarterly run-rate at acquisition. Bailly added that new robotic surgery programs will launch in H2 2025, with modest revenue this year and a more meaningful contribution in 2026.

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CFO Rick Buchholz explained that the primary driver is an increase in direct-to-consumer (DTC) spending to amplify messaging around the Inspire V launch. He noted that this spending was intentionally held back in the first half to focus on the transition and is now being ramped up in the second half, along with continued investment in adding new sales territories.

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CEO Tim Herbert outlined a multi-faceted marketing program. He explained that the company will continue its strong outreach to drive patients to its website, which will be updated with detailed information about Inspire V. Additionally, they will conduct a direct outreach campaign to the significant number of patients who have previously registered on their site, informing them that the new technology is now available.

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CEO Tim Herbert stated that they believe the Q4 guidance has been de-risked for these factors, with the main challenge being rescheduling patients amid existing capacity constraints. Regarding new centers, he explained that their process involves screening and preparing sites to be productive from the start, with the intention that they ramp up utilization quickly, regardless of when they are activated within the year.

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CFO Brett Sandercock confirmed the improvement will stem from a pipeline of cost optimizations in procurement, manufacturing, and logistics, plus tailwinds from product mix and the AS11 transition. He expects margins to start at the low end of the range and progressively improve through the fiscal year.

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CFO Brett Sandercock outlined a multi-faceted approach, citing a continued pipeline of cost optimizations in procurement and manufacturing, scale benefits, logistics efficiencies, and the ongoing AS10-to-AS11 platform transition. He anticipates starting the fiscal year at the lower end of the 61-63% range and exiting at a higher rate.

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CFO Brett Sandercock elaborated that a primary driver was a strong improvement in the sea-to-air freight ratio, which is now close to pre-COVID levels. Other key factors include benefits from manufacturing scale, continuous process improvements, and efficiencies gained from the maturity of the AirSense 10 and AirSense 11 device platforms.

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CEO Michael Farrell described a strategy focused on "demand capture and demand conversion" through a "digital sleep health concierge" model. This involves leveraging digital tools like the Dawn GenAI chatbot, Somnoware physician software, and the MyAir patient app to create a seamless pathway for new patients entering the funnel.

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COO Peyman Khales explained the Q2 strength was partly due to a demand pull-forward from Q3, strong new product launches, and accelerated execution at the New Ross facility. He noted the second half faces tougher comps, justifying maintaining the 8.5% midpoint for full-year growth. President & CEO Joseph Dziedzic added that the CRM & Neuromodulation segment's second-half growth is expected to accelerate to high-single-digits, driven by improving neuromodulation customer demand and the easing of a planned program decline that impacted the first half.

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CEO Joseph Dziedzic explained that the tariff impact is limited because customers manage logistics for products Integer sells, and the company sources minimally from China. For the CRM&N segment, he attributed the 2% growth to fewer selling days and normalized CRM demand, while noting strong growth from emerging PMA customers. He projected the segment would trend toward mid-single-digit growth long-term as neuromodulation's mix increases.

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President and CEO Joseph Dziedzic confirmed that the Cardio & Vascular segment is expected to grow in the low double-digits in 2025. He explained that the coating acquisitions were a long-term strategic goal to vertically integrate a high-value capability, and the timing was dependent on the sellers being ready. Regarding tariffs, Dziedzic stated that while the impact is difficult to quantify due to uncertainty, the company is actively implementing mitigation plans as if tariffs will be enacted.

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Joseph Dziedzic, President and CEO, explained the Q3 organic growth of 4% was largely expected due to a normalization in CRM demand, which was visible in their order book early in the year. He noted growth would have been closer to 5% without a minor impact from Hurricane Helene. Regarding the leadership changes, Dziedzic stated the promotions of Payman Khales and Andrew Senn are about accelerating strategy execution and giving successful leaders broader responsibilities to continue driving growth.

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President & CEO Albert White advised not to read too much into the 7% growth for torics and multifocals, stating the market remains strong and the quarterly figure was affected by the timing of Biofinity shipments. He reported that the China business was essentially flat in Q2, an improvement from being down in the prior quarter.

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CEO Al White emphasized that the strategy for PARAGARD is to 'continue to execute,' leveraging the strong team and the recent launch of the new single-hand inserter. He believes the product is well-positioned. Regarding guidance, he acknowledged that PARAGARD revenue can have dramatic quarterly swings but expects the full-year result to be in a tight range around flat, similar to the previous year, as the underlying non-hormonal IUD market is not seeing significant unit growth.

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CEO Al White expects MiSight growth to be driven by markets around the world, highlighting traction with key accounts in the U.K. and Europe and successful strategies in Korea. He expressed optimism for exceeding 40% growth if uptake by large retailers accelerates. For competitive reasons, he declined to specify the size of the Energys lines but confirmed they are becoming "more material," with MyDay Energys being a significant growth driver.

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CEO Al White attributed Cooper's consistent outperformance to its broad, innovative product portfolio and its strategic focus on expanding into daily silicone hydrogel lenses, particularly in toric and multifocal categories. Regarding SightGlass, he stated there were no new updates to the timeline, with the company still targeting potential FDA approval in the latter part of next year while working through the clinical process.

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Chief Executive Officer David Endicott confirmed that the vast majority of the impact was from the Aurion acquisition. However, he added that the acquisition of another asset called Cylite during the quarter, along with some minor licensing activities, also contributed to the headwind.

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CEO David Endicott reported that the reception for PRECISION7 has been 'terrific,' with over half of its uptake coming from the intended two-week and reusable lens market. He noted that optometrists appreciate the intuitive and healthier one-week replacement schedule. He believes the product will be a nice incremental contributor in a meaningful market segment where Alcon was previously underindexed.

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CEO David Endicott explained that consumables growth is highly correlated to procedural volumes, which were softer globally in the quarter. He noted that the 5% growth was still ahead of the market. Regarding specialty lenses, he stated that while competition is increasing, Alcon is in a strong position due to its unique toric lens designs, which are performing very well and driving growth for the entire brand family.

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Executive Brian Bonnell confirmed that the USMCA exemption has significantly mitigated tariff exposure from Mexico, making it the third-largest concern behind Costa Rica and China. Both Bonnell and Executive Vivek Jain stated that while the tariff impact makes the original guidance more challenging, the goal remains to hold the low end of the ranges for metrics like adjusted EBITDA and EPS by using offsets from favorable foreign exchange, cost controls, and lower incentive compensation.

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Executive Vivek Jain characterized the capital environment as stable, where necessary investments are proceeding, and emphasized that the company is focused on securing net competitive wins with Plum Duo. Regarding the Consumables forecast, he acknowledged the segment's strong performance but stated a preference for setting rational expectations, highlighting that growth is driven by numerous niche markets and not solely by GPO pricing.

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Executive Vivek Jain explained that a sale was never considered as IV Solutions is a core product. The JV with Otsuka was chosen to bring necessary innovation, scale, and supply redundancy that ICU could not achieve alone. He clarified the put-call option is based on a revenue multiple and is exercisable after five years, providing long-term flexibility. Regarding the ERP, Executive Brian Bonnell confirmed the Q3 cutover was successful with no material impact on quarterly results, despite some internal disruption.

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