Brooks O'Neil • Lake Street Capital Markets

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President and CEO James Cunniff explained that the company is taking a thoughtful and deliberate approach to hiring, ensuring existing reps are prepared for territory changes and that new hires are high-quality. He also noted an investment in a new sales rep for the hospital business. CFO Brad Nagel added that since the company has exceeded the revenue-per-rep target for two of the last three quarters, they may revise it upward. Regarding reimbursement, Mr. Cunniff stated that the company feels insulated from volatility and has seen improved payer coverage opportunities due to a new leader in their payer relations department.

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James Cunniff, an executive at Electromed, stated that while Hill-Rom recently upgraded its technology, it has not impacted Electromed's business. He emphasized that SmartVest remains best-in-class with its single-hose design, comfortable garments, and lifetime warranty. Regarding new drugs, Cunniff explained that an upcoming drug for bronchiectasis is viewed as complementary to, not a replacement for, airway clearance therapy. On sales force productivity, he attributed the high revenue per rep to better performance management, improved hiring, and enhanced onboarding processes, noting that revenue is now more broadly distributed across the entire sales team.

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Executive Patrick Miles explained that while the market is difficult to value, ATEC's key advantage is its unique prone position (PTP) approach, which offers access to both the front and back of the spine. He highlighted the system's advanced engineering and integration with SafeOp monitoring. Miles confirmed that EOS will be integral for pre-operative planning and post-operative assessment to ensure proper alignment, which is critical for improving long-term patient outcomes.

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Patrick Miles (Executive) assured that the company's strategic plan already incorporates the dynamics of a disrupted marketplace and that significant investments have already been made. He stated he does not foresee unique, outsized expenses that would undermine the company's financial thesis, expressing confidence in leveraging ATEC's expertise in spine.

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Executive Patrick Miles emphasized the company's commitment to becoming self-funding, pointing to consecutive quarters of flat operating expenses and a streamlined organization. Executive J. Koning added that growth is generating profitability, highlighting a deliberate expansion of EBITDA margins and a significant 2024 investment in inventory that reduces the required spend for 2025, providing a clear path to cash flow breakeven.

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Chief Financial Officer Ali Pervaiz explained that product margins were impacted by a higher margin deferral on China shipments in Q3, but noted that the year-to-date product margin of around 31% is in line with expectations. President and CEO Suzanne Winter added that while the China impact is currently the most significant, the company sees offsetting strength in its IMEA region, which includes India, and the non-China APAC region.

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CEO Suzanne Winter explained that Japan's strong first-half performance was anticipated due to customer installation timing in what is primarily a competitive replacement market. Regarding other markets, she highlighted the EIMEA region's expected second-half growth, driven by the new Helix platform which has already secured orders in Pakistan and Northern Africa. She noted they are awaiting regulatory approval for Helix in India. Winter emphasized that the competitive advantage for products like Helix and Tomo C stems from differentiated clinical capabilities, such as helical delivery, rather than just pricing.

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President and CEO Suzanne Winter confirmed that Accuray has received CE Mark for the Helix product, is taking orders in India, and expects to begin shipping in early Q3 after local regulatory testing is completed. Regarding the U.S. election, she noted that as the only U.S.-headquartered radiotherapy company, Accuray could benefit from policies favoring U.S. manufacturing, but the company is monitoring potential changes while remaining confident in the fundamental, growing demand for cost-effective cancer care.

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CFO Leigh Vosseller stated that while current guidance only assumes a modest contribution from the pharmacy channel in 2025, early learnings have been very positive. She indicated that the channel could represent a more significant opportunity than originally anticipated in the long term.

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EVP and CFO Leigh Vosseller stated that while she could not share contractual or competitive details, any agreement must meet two key criteria: lowering the patient's out-of-pocket cost and being at least as economically favorable as their existing DME contracts. She confirmed the new agreement met this standard.

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CFO Marc Benathen attributed the gross margin dip to onetime costs from onboarding a new pharmacy, stating that margins are expected to normalize to 88-90%. He also confirmed WorkSimpli is back on track, generating over $1 million in monthly adjusted EBITDA. Executive Justin Schreiber expressed high optimism for eventual Medicare coverage of GLP-1s and noted that telehealth coverage has been extended with strong bipartisan support for a permanent solution. Marc Benathen then detailed the Behavioral Health launch, highlighting the hiring of industry veteran Julian Cohen and an initial async-first offering for anxiety and depression, with plans to partner for talk therapy solutions.

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CFO David Francisco clarified that the market challenge stems from customer buying behavior pausing due to reimbursement uncertainty from the LCD delay, not from a change in competition. He noted that the short shelf life of living technologies limits inventory stocking. CEO Gary Gillheeney outlined the ReNu timeline, projecting a BLA submission by the end of 2025, potential FDA feedback in Q4 2026, and a market launch in late 2026 or early 2027.

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CFO Doug Rice characterized the company's legal stance as playing 'offense' to protect its business. He noted the AXIOFIL case has been reassigned to a new judge with a hearing set for late March, a positive sign. The Surgenex case is proceeding through depositions. Regarding IP, he confirmed MiMedx has filed one lawsuit and is actively communicating with other companies believed to be infringing on its patents, viewing these actions as a way to protect its portfolio and potentially generate royalty streams.

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CEO Joseph Capper reported that customer adoption of MiMedx Connect continues to exceed expectations, with users providing positive feedback on its ability to enhance practice workflow. He added that the company is actively developing additional features based on this feedback to further integrate into customer operations and increase loyalty.

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CEO Mark Baum explained that Q3 is historically weak due to summer vacations reducing surgical procedures. Regarding launches, he noted IHEEZO overcame early reimbursement hurdles and is now positioned for strong growth. He highlighted VEVYE's exceptional refill rates and stated that while TRIESENCE has faced minor issues, the company has contingency plans. Baum clarified that while they will service existing IHEEZO cataract customers, the strategic 'retina pivot' is to focus on the larger, more clearly reimbursed intravitreal injection market to achieve long-term revenue goals.

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Executive Gary Maharaj affirmed the partnership with Abbott is strong and that the SurVeil TAM is dynamic and potentially much larger than the current market. He noted no current discussions with Abbott on below-the-knee products but confirmed talks with other parties. On R&D, he explained the strategy of front-loading investment to build a pipeline, which will normalize over time. Executive Timothy Arens quantified the SurVeil TAM at over $1 billion and confirmed consistent monthly orders from Abbott since its late-January launch. He added that R&D spending is decreasing as a percentage of revenue and is not expected to return to previous highs.

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