Caitlin Cronin

Caitlin Cronin asked for updates on 7D placements and strategy during the quarter. She also inquired about the impact of Playbook and IOTA Motion launches on the 2026 guidance and their expected launch cadence.

Answer

David Bailey (President and CEO) reported a normal quarter for 7D placements, noting slow customer paperwork processing despite high interest and a large demo funnel. He highlighted strong implant business performance in accounts with existing 7D units, driving RESPONSE fusion growth, but reiterated that 7D is not a major factor in the 2026 guide. For Playbook and IOTA Motion, he stated their revenue contribution to the current guide is extremely small, despite significant interest and the recent first IOTA Motion unit sale.

Caitlin Cronin from Canaccord Genuity requested updates on 7D placements and strategy, and inquired about the impact of Playbook and IOTA Motion launches on 2026 guidance and their cadence.

Answer

President and CEO David Bailey noted a normal quarter for 7D placements with slow paperwork processing but a large funnel, emphasizing strong implant business performance in existing 7D accounts. He stated that Playbook and IOTA Motion launches have an 'extremely small' impact on the 2026 guidance, despite high inbound interest for IOTA Motion following its first sale.

Caitlin Cronin asked about the performance of the foot and ankle business at the end of 2025 and the outlook for the foot and ankle market in 2026. She also requested more details on the multi-year pipeline for extremities more broadly.

Answer

Damien McDonald, Chief Executive Officer, noted that while front-end bookings remained strong, the back-end of the foot and ankle market saw softness in 2025, but Enovis significantly outgrew the market due to its balanced portfolio, including DynaNail. He emphasized extremities as a key focus with a long runway. Regarding the broader extremities pipeline, he stated that details would be shared publicly as the year progresses, with some innovations showcased at AAOS and specific shoulder events, focusing on three-system compatibility and expanding into sports medicine arthroplasty.

Caitlin Cronin from Canaccord Genuity asked about Enovis's year-end performance in the foot and ankle business within extremities and the market outlook for 2026. She also sought more color on the broader multi-year pipeline opportunities within the extremities segment.

Answer

Damien McDonald (CEO) reported strong front-end bookings but back-end softness in foot and ankle for 2025, believing Enovis significantly outgrew the market with a balanced portfolio. Regarding the broader extremities pipeline, he indicated more details would be shared later in the year, highlighting a focus on three-system compatibility for shoulders and expansion into sports medicine arthroplasty.

Caitlin Cronin of Canaccord Genuity inquired about the progress of the ARVIS shoulder launch and the significance of the next-generation updates. She also sought clarification on the expected step-down in EMDR costs and which products would be affected.

Answer

CEO Damien McDonald described the surgeon reaction to ARVIS for shoulder as 'tremendous,' highlighting its portability and scalability. He noted significant excitement for the next-gen version's lighter headset and improved software. CFO Ben Berry clarified that the EMDR costs are related to remediating tech files for existing products to maintain market access in Europe, not for new product approvals, and that this is the last significant year of that spend.

An associate for Caitlin Cronin asked for an update on the Arvis shoulder launch progress and rollout timing, including international plans, and also inquired about the cadence of other new product launches this year.

Answer

CEO Matthew Trerotola stated the Arvis shoulder launch is proceeding 'really well' in a controlled phase, generating extremely positive surgeon feedback and creating significant buzz. He then detailed a full pipeline of launches for the year, including knee revision products, the ARG in shoulder, a new hip stem, and enabling technologies, as well as spine braces and the Manafuse product in P&R.

Caitlin Cronin asked about the phasing of the remaining Lima integration goals for years two and three. She also inquired about the specific drivers of the 10% extremities growth in Q4, particularly the performance of shoulder versus foot and ankle.

Answer

CFO Phillip Berry outlined that year two (2025) of the Lima integration should yield 10-20 basis points of margin impact, with the remainder of the $40M+ cost synergy goal realized in 2026 from larger operational projects. He also noted that Q4 extremities growth was driven by both shoulder, which returned to at/above market growth, and foot & ankle, which delivered strong double-digit growth.

Caitlin Cronin asked about the end-market dynamics and procedural demand in Foot & Ankle. She also inquired about the expected recovery timeline for the Hip segment following upcoming product launches.

Answer

CEO Matthew Trerotola described the Foot & Ankle market as a high-single-digit grower with significant innovation opportunities, though it can have more variability than large joints. For the U.S. Hip business, he expects new products launching around year-end to have a meaningful impact by Q2 2025 and a more substantial impact in the second half of the year.

Caitlin Cronin of Canaccord Genuity followed up on enabling technology, asking if deal timelines are still elongated or compressing. She also inquired about Globus Medical's broader strategy for Nevro to access lower acuity settings as spine procedures increasingly shift to alternative sites of care.

Answer

Keith Pfeil, President and CEO, noted that enabling tech deals from the pipeline closed in Q4 2025, and while rebuilding the Q1 pipeline, he is cautiously optimistic that deal elongation won't be as severe as last year, especially with increased flexibility in quoting. Regarding Nevro, Pfeil explained that it brings Globus Medical into smaller centers and pain points, with a focus on cross-selling legacy Globus products. He believes this positions the company well as procedures migrate to ASCs or pain centers, with the immediate focus on stabilizing Nevro and driving its core product sales.

Caitlin Cronin asked about the current state of enabling technology deal timelines (elongated or compressing) and the broader strategy for Nevro to access lower acuity settings as spine procedures migrate from hospitals.

Answer

Keith Pfeil, President and CEO, noted that Q4 saw enabling tech pipeline deals close, and while Q1 is rebuilding, he's encouraged by progress and expects less elongation due to flexible quoting. For Nevro, he highlighted its role in smaller centers and pain, with excitement for cross-selling legacy Globus products, and a focus on stabilizing the business in 2026.

Caitlin Cronin of Canaccord Genuity Inc. asked if the company was through its new insourcing efforts or if more product lines were set for vertical integration. She also inquired about other initiatives, besides financing, to shorten the elongated selling timelines for Enabling Technology.

Answer

President & CEO Keith Pfeil clarified that manufacturing initiatives are multifaceted and ongoing, with output expected to increase as staff become more efficient with new machinery. He noted the main remaining integration task is consolidating international businesses. Regarding Enabling Tech, Pfeil stated that the company offers a full suite of financing options and believes the current focus should be on closing deals within the strong existing pipeline, as there is no shortage of offerings.

Caitlin Cronin of Canaccord Genuity asked about the underlying U.S. spine market growth and procedural health. She also inquired about the approval status of Modulus for the Excelsius robot and cross-selling traction with legacy NuVasive surgeons.

Answer

CEO Dan Scavilla noted he lacked hard data on market growth but shared anecdotal surgeon feedback of a slowdown. He confirmed Modulus approval for Excelsius is 'in the works' and that they are already seeing a 'decent impact' from placing robots and the fully integrated ReLine system into legacy NuVasive accounts.

Caitlin Cronin of Canaccord Genuity inquired about the importance of Nevro's SI joint portfolio in the acquisition decision and asked about the launch progress and commercial strategy for the ExcelsiusFlex system.

Answer

CEO Dan Scavilla stated that Nevro's SI joint portfolio was not a driving factor in the acquisition decision, viewing it as a minor enhancement to Globus's existing offerings. CFO Keith Pfeil commented that the ExcelsiusFlex launch is in a 'crawl, walk, run' phase and is not expected to be a meaningful revenue contributor until 2026, as the focus remains on building a holistic procedural solution with supporting implants.

Caitlin Cronin of Canaccord Genuity inquired about the value proposition of the new ortho robot and the early customer profile for the freehand navigation system.

Answer

President & CEO Dan Scavilla highlighted the ortho robot's small footprint, modern design, smooth movements, and flexible workflow that doesn't require pre-planning. For the freehand navigation system, he stated that it opens the largest segment of the navigation market for Globus and has seen strong early excitement and procedures across all settings (hospitals, outpatient, ASCs), positioning it to be a meaningful contributor in 2025.

Caitlin Cronin asked about seasonality expectations for the 2026 revenue guidance, particularly with the U.S. ramp, and inquired about the number of high-volume U.S. accounts and the average penetration within existing accounts.

Answer

Raj Denhoy, CFO, Establishment Labs, explained that the U.S. is expected to grow sequentially in Q1 (modestly up, despite typically being a down quarter for the market), followed by continued step-ups and a strong finish to the year, aligning with normal seasonality. Internationally, the pattern is more normalized. He noted that while the company initially signed many high-volume accounts, the 1,500+ accounts now span a broader spectrum. Penetration is still low in many accounts, especially those onboarded in the last six months, making 2026 a key year for expanding accounts and deepening penetration. Peter Caldini, Board of Directors, Establishment Labs, emphasized that enhancing penetration in existing accounts is a major focus for 2026, as early adopters have already moved a majority of their volume to Motiva, indicating significant opportunity in underdeveloped accounts.

Caitlin Cronin asked about the role of Ambulatory Surgical Centers (ASCs) in Zimmer Biomet's revamped U.S. strategy and the company's ASC penetration rates for hips, knees, and shoulder at the end of 2025.

Answer

Ivan Tornos, Chairman, President, and CEO, reported ASC penetration for hips and knees exited 2025 in the 20%-22% range, speculating shoulder penetration is higher. He outlined the ASC strategy focusing on dedicated personnel, a comprehensive portfolio (including Monogram and other products), and strategic partnerships.

Caitlin Cronin asked about the role of Ambulatory Surgical Centers (ASCs) in Zimmer Biomet's revamped U.S. strategy and the company's year-end ASC penetration rates for hips, knees, and shoulder procedures.

Answer

Ivan Tornos, Chairman, President, and CEO of Zimmer Biomet, reported that the company ended 2025 with 20-22% ASC penetration for hips and knees in the U.S., speculating that the shoulder penetration rate is higher but not recalling the exact figure. He outlined a bullish ASC strategy focused on dedicated personnel (including a new President for ASCs and active hiring), a comprehensive portfolio (no gaps, Monogram opportunity, 7-10 other ASC-relevant products), and strategic partnerships (strong momentum with Getinge and ongoing negotiations with large groups).

Caitlin Cronin of Canaccord Genuity Inc. asked for commentary on robotic placement trends in the quarter, the pipeline for the rest of the year, and the performance of the partnership with Think Surgical.

Answer

Chairman, President & CEO Ivan Tornos noted that while the category's reported revenue declined due to a mix shift from outright sales to placements, installations remain on track. He confirmed the exclusive partnership with Think Surgical was recently extended, citing a large deal pipeline. He also highlighted a next-gen ROSA Knee launch in late 2025 as a future accelerator.

Caitlin Cronin asked for an update on the Paragon 28 acquisition, including any early integration news and the expected timeline.

Answer

President and CEO Ivan Tornos reported that the integration is proceeding 'far better than expected.' He highlighted key successes, including the retention of the entire Paragon 28 senior commercial leadership team and its U.S. sales force, which ensures minimal disruption. He also confirmed the plan to preserve Paragon 28's innovation engine and culture.

Caitlin Cronin from Canaccord Genuity requested more color on the positive pricing trend, specifically on U.S. dynamics and the reasons for the improved full-year outlook.

Answer

CFO Suketu Upadhyay explained that the third consecutive quarter of positive pricing was driven by a better structural market, improved internal governance, and opportunistic price increases. This performance led to the updated full-year guidance of flat to +50 basis points. He noted the U.S. was down only modestly, an improvement over historical trends.

Caitlin Cronin of Canaccord Genuity Inc. inquired about the salesforce headcount at the end of Q2, expectations for year-end 2025, and any changes to the anticipated cadence of revenue and OpEx for the remainder of the year.

Answer

CEO Antony Koblish stated the company ended the quarter with 69 territory managers and 25 account specialists and plans to reach its target of 76 territory managers. President Jeffrey Blizard confirmed active recruiting is underway. CFO & COO Roberto Cuca outlined the expected revenue cadence, noting a typical step-up from Q1 to Q2, flatter growth into Q3 due to summer holidays, and a larger increase from Q3 to Q4. He added that OpEx is expected to remain largely flat quarter-over-quarter.

Speaking on behalf of Caitlin Cronin from Canaccord Genuity, an associate asked about the company's strategy to handle GPO bundling and volume caps at certain hospitals. The question specifically probed whether TELA is working to have its products reclassified into a separate category.

Answer

CEO Antony Koblish described the strategy as 'basic blocking and tackling,' focused on increasing the number of surgeons using TELA products within each facility to gain leverage. He highlighted that the new Territory Manager (TM) and Account Specialist (AS) sales structure is crucial for this, enabling TMs to open new accounts while ASs deepen penetration and ensure continuous coverage. This provides both an offensive and defensive capability to manage GPO dynamics more effectively.

Caitlin Cronin inquired about the expected revenue cadence for 2025, the strategies in place to prevent future sales rep attrition, and the specific contribution of rep disruption versus external factors to the Q4 revenue miss.

Answer

CFO Roberto Cuca projected a standard seasonal revenue cadence for 2025, with growth accelerating in Q2 and Q4. CEO Antony Koblish detailed a new enhanced compensation plan and a 'team selling' model with Account Specialists to improve retention. Koblish emphasized that the primary driver of the Q4 shortfall was the unexpected loss of sales reps late in the quarter, which had a greater impact than external factors like the hurricane or IV fluid shortages.

Caitlin Cronin of Canaccord Genuity inquired about the source and sustainability of the announced $5 million to $10 million in OpEx savings and asked if Q3 revenue was inflated by a backlog from Q2's cyberattack disruptions.

Answer

Executive Roberto Cuca explained the OpEx savings are primarily from sustainable headcount reductions in the sales organization as reps became more efficient, reducing the need for clinical specialists. Both Cuca and executive Antony Koblish clarified they did not see a significant backlog from Q2 flow into Q3, stating that procedure volumes at affected hospitals simply returned to normal pre-disruption levels rather than surging.

Caitlin Cronin asked about the strategic importance of the next-gen pump for international markets, its clearance and launch timing outside the US, the ongoing impact of tariffs, and management's confidence that the US distributor inventory issue is a one-time Q3 event.

Answer

President & CEO Linda Tharby explained the next-gen pump is critical for international growth as it accommodates all pre-filled syringe sizes, simplifying infusions. She anticipates an EU filing about one quarter after the US submission. CFO Tom Adams quantified the tariff impact at approximately 90 basis points, which is being mitigated by operational efficiencies. Both executives expressed confidence the distributor issue is a one-time Q3 event, based on strong end-user demand data.

Caitlin Cronin inquired about the current U.S. penetration of prefilled syringes (PFS), the details of the international PFS tender win, and the approval process for the new pump outside the U.S. She also asked for clarification on how potential tariffs were factored into gross margin guidance, given the company's OUS production.

Answer

Executive Linda Tharby reported that U.S. prefilled syringe penetration has surpassed 65%. She highlighted the international tender win as a key milestone, as KORU's system can use prefills directly while dominant e-pumps in Europe cannot, creating a significant opportunity. Executive Tom Adams clarified the tariff impact, stating that after a full supply chain analysis, the effect is under 100 basis points and is already incorporated into the reaffirmed 61% to 63% gross margin guidance for the year.

Caitlin Cronin asked about the potential impact of macroeconomic issues like hurricanes and port strikes, and requested an update on the SCHOTT partnership and any resulting synergies.

Answer

CFO Tom Adams confirmed there was no impact from macro issues, as the company proactively increased inventory to mitigate risks, with levels expected to normalize in Q4. President and CEO Linda Tharby added that the SCHOTT partnership is progressing well, with teams meeting regularly to optimize the device-syringe combination and collaborate on new pipeline opportunities.

Caitlin Cronin requested more details on the launch and commercialization strategy for the Talisman and StimTrial PNS systems and asked when the PNS portfolio is expected to become a significant revenue contributor. She also asked about the increased tariff expectations and their potential impact.

Answer

CEO Robert Claypoole outlined a limited PNS launch in H2 2025, followed by a rapid ramp in 2026, noting the new PNS and PRP platforms could add 200 basis points to company growth next year. SVP & CFO Mark Singleton explained the expected tariff impact has risen to $3 million for the year. He emphasized that this, along with a $2 million FX headwind, has been absorbed within the reaffirmed full-year guidance, showcasing the P&L's strength.

Speaking on behalf of Caitlin Cronin, an associate asked at what leverage level the company would become more constructive on M&A opportunities. A follow-up question concerned whether the new OUS (international) business manager had started and what their initial strategic initiatives were.

Answer

CEO Rob Claypoole stated that the primary focus for capital deployment is reducing leverage to below 2.0x, given the strength of the current portfolio and new growth drivers like PRP. However, he affirmed they will pursue synergistic deals that align with their mission, citing the recent PRP distribution agreement as an example. He also confirmed the new international leader started in the current month and will focus on driving a disciplined growth strategy by prioritizing specific countries and products and improving commercial execution.

Caitlin Cronin requested a breakdown of growth expectations within the Pain Treatments portfolio, details on the strategy for OUS expansion, and the timeline for expanding the Ultrasonics business into new surgical areas.

Answer

SVP and CFO Mark Singleton explained that within Pain Treatments, DUROLANE is the primary growth driver, SUPARTZ is stable, and GELSYN is declining as the market and company efforts shift toward single-injection therapies. President and CEO Robert Claypoole added that OUS expansion will be a targeted, high-ROI effort under new leadership. For Ultrasonics, he clarified that while the portfolio covers neuro and general surgery, the primary focus remains on spine, with a more significant expansion into other areas expected in 2026 and beyond.

Caitlin Cronin inquired about potential concerns regarding a competitor refocusing on the HA market. She also asked how Bioventus's Ultrasonic tools compare to new market entrants and requested more detail on the innovation pipeline and the outlook for the OUS business.

Answer

CEO Robert Claypoole expressed confidence in the HA business, citing strong clinical differentiation, a dedicated sales force, and robust payer contracts as key drivers of market share gains. He noted that while they are in the early stages with Ultrasonics, they have world-class technology and will increase R&D investment for future innovation. Claypoole also stated he remains very optimistic about the long-term growth potential of the international business, though foundational work is still required.

Caitlin Cronin of Canaccord Genuity Inc. asked for an update on the U.S. spine distributor transition and its expected impact on growth, and also inquired about the launch of AccelStim 2.0 and its potential contribution.

Answer

President and CEO Massimo Calafiore stated that the distributor transition is progressing well and is expected to positively impact growth from Q3 onward, helping the company achieve its three-year plan CAGR. He also confirmed AccelStim 2.0 was FDA approved and will launch in H2, with its seamless connectivity to the post-op platform generating significant surgeon interest.

Caitlin Cronin of Canaccord Genuity Group Inc. asked which business segment would be affected by the reduction in NGO business, whether the company was updating its long-term guidance, and for an update on the 7D Flash navigation system and the capital equipment environment.

Answer

CFO Julie Andrews stated the NGO business impact will be seen in the international Orthopedics segment and that the company is not updating its long-term guidance at this time, with an update planned for the Q4 call. She also mentioned that progress continues with the 7D system, with a focus on earn-out placements to drive pull-through for the spine business, but offered no specific updates on the broader capital environment.

Caitlin Cronin inquired about the rationale for discontinuing the M6 artificial disc product line, the company's current strategy regarding M&A, and the adoption trends for the 7D FLASH Navigation System, including its installed base and earn-out agreements.

Answer

CEO Massimo Calafiore explained that the M6 exit was a strategic decision to reallocate investment towards more profitable, high-growth areas like spine deformities, given the disc's decreasing demand. He noted that while M&A is not an immediate focus, the company's improved balance sheet allows them to be opportunistic. Regarding the 7D system, he stated 2024 was a record year with a 150% year-over-year increase in earn-out agreements, which are exceeding performance expectations and successfully driving implant pull-through with new customers.

Caitlin Cronin from Canaccord Genuity Inc. asked for more color on the late-cycle BLA meeting with the FDA and whether any changes to the cadence of operating expense spending are expected in the second half of the year given hiring progress.

Answer

President and CEO Michael Dale described the FDA interactions as professional and cooperative, noting that final clarity on requirements typically comes at the very end of the process. He stated that while there is no change to the current OpEx guidance, the company is evaluating the possibility of accelerating hiring plans due to the significant market opportunity for nerve care.

Caitlin Cronin from Canaccord Genuity inquired about the ability to sell existing Avance inventory post-BLA approval, the expected cadence of operating expenses for the year, and the total sales team headcount at the start and end of the year.

Answer

CEO Michael Dale confirmed that existing inventory produced under the tissue designation will still be available for sale after BLA approval. CFO Nir Naor noted that OpEx is expected to grow gradually due to strategic hiring, with some costs rolling off after the BLA approval in September. Regarding headcount, Michael Dale stated the company plans to add a net of approximately 20 salespeople by year-end.

Caitlin Cronin from Canaccord Genuity inquired about the long-term gross margin outlook beyond 2025 and whether there were any concerns regarding the BLA application process under the new administration.

Answer

CEO Michael Dale stated that for 2025, the focus is on getting through the BLA process, which limits dramatic process changes, making the current guidance prudent. He expects incremental improvements longer-term. Regarding the BLA, Dale reported no signs of delay, noting that communication with the FDA remains active and consistent.

Caitlin Cronin from Canaccord Genuity inquired about the BLA submission, asking why the FDA did not grant priority review and the significance of the decision not to hold an advisory committee meeting. She also asked if the company would continue to report metrics on 'core accounts' and 'direct reps.'

Answer

CEO Michael Dale speculated that the FDA's decision for a standard review was not concerning and that the lack of an advisory committee could reflect confidence in the product's long history and safety profile. He also stated that the company will no longer report on 'core accounts' or 'direct reps,' instead focusing on 'high potential accounts.'

Caitlin Cronin of Canaccord Genuity Inc. asked if new surgeons are now engaging with products like Granite before the traditional SI joint fusion products. She also requested more detail on the investments that will lead to cash use in the second half of the year.

Answer

CEO Laura Francis confirmed that while SI joint fusion remains the cornerstone, some new surgeons, particularly adult deformity specialists, are now entering the ecosystem through Granite, creating a 'halo effect' for cross-selling. CFO Anshul Maheshwari clarified that the anticipated second-half cash use is primarily for building surgical capacity and inventory in preparation for Q4 and the new product launch in 2026.

Caitlin Cronin of Canaccord Genuity asked about the potential reimbursement code for the new SI Joint Fusion solution, sought more color on the third breakthrough device, and questioned the materiality of interventionalists to the surgeon base.

Answer

CEO Laura Francis declined to specify a reimbursement code for the new SI joint product, emphasizing the strategy is to offer a comprehensive portfolio for all physician needs. She described the third breakthrough device as a novel implant leveraging core technology for a pressing need in spine surgery. Francis clarified that while surgeons are the majority, interventionalists are an additive and growing segment, with a record number performing procedures in Q1.

Caitlin Cronin asked for SI-BONE's perspective on the proposed Globus Medical acquisition of Nevro and its competitive implications, and also inquired about the commercialization timeline for the newly announced novel implant with Breakthrough Device Designation.

Answer

CEO Laura Francis stated that the Globus/Nevro deal substantiates SI-BONE's platform strategy and does not change their approach, expressing confidence in their market leadership. Regarding the new BDD product, she noted it is in early development with no revenue contribution expected in 2025, and details will be shared closer to launch.

Caitlin Cronin of Canaccord Genuity asked about the inventory set build-out required for the successful Granite 9.5 launch and whether a similar build-out is needed for the new TORQ TNT product.

Answer

CFO Anshul Maheshwari explained that Granite 9.5 conveniently uses the same instrument sets as the 10.5 version, driving higher asset utilization, though overall capacity is still being added to meet strong demand. For the new TNT product, he confirmed it requires a new tray and that capacity is being added thoughtfully to support strong early demand from surgeons and new regional agencies, all within the company's asset-light CapEx model of $7-8 million annually.

Caitlin Cronin of Canaccord Genuity Inc. asked about competitive pressure in the hips market and trends in robotic hip procedure penetration. She also inquired if the strength in navigation was related to the Q Guidance system.

Answer

Chair & CEO Kevin Lobo stated that both hip and knee robotic procedure penetration continue to climb, driven by new software and the Insignia hip stem. He emphasized focusing on Stryker's own commercial offense rather than competitors. He confirmed the strength in navigation is directly related to the Q Guidance system, which is a core component of the Mako 4 platform and is also used with the CoPilot haptic burr, driving a strong system-based performance.

Caitlin Cronin asked for color on the performance of last year's tuck-in acquisitions and how the strong Ortho performance reflects trends in the Ambulatory Surgery Center (ASC) setting.

Answer

CEO Kevin Lobo reported that all seven acquisitions from last year are performing at or ahead of plan, with the Artelon and Vertos deals off to a particularly fast start. VP Jason Beach added that the shift of procedures to ASCs continues to be a tailwind, with the percentage of Stryker's hips and knees performed in that setting increasing every quarter.

Caitlin Cronin asked if the new Mako applications for spine and shoulder were driving increased 'one-stop shop' interest from hospitals and ASCs. She also inquired about the performance of the Foot & Ankle business in Q4.

Answer

CEO Kevin Lobo responded that it is still early days for the new Mako applications, which are in limited launch, but the brand is generating excitement. He noted that while the Foot & Ankle market improved in Q4, the standout growth in Trauma & Extremities was driven by the Shoulder and Core Trauma businesses.

Caitlin Cronin inquired about the total number of MACI Arthro biopsies, the timeline for the MACI sales force expansion, and whether dormant Epicel accounts were still being reactivated through NexoBrid engagement.

Answer

CEO Dominick Colangelo noted it's difficult to parse specific 'Arthro' biopsies but highlighted accelerating overall biopsy growth and a 40% increase in small femoral condyle defects. He detailed the sales force expansion plan, aiming for new reps to be supporting territories by Q4 2025. He also confirmed the trend of dormant Epicel accounts reactivating has continued.

Caitlin Cronin requested more details on the planned MACI sales force expansion, including the number of new territories this year and future plans for 2026. She also asked about the composition of the 400 MACI Arthro-trained surgeons, specifically the mix of legacy versus new users. Lastly, she inquired if the lower graft-per-patient ratio for Epicel was becoming a systemic trend.

Answer

CEO Nick Colangelo stated that while plans are not finalized, the sales force expansion would likely involve a 'couple of dozen' territories to support growth into 2026. He confirmed that the 'low-hanging fruit' of current MACI users constitutes the vast majority of the 400 surgeons trained on Arthro so far. Regarding Epicel, he clarified that the lower graft-per-patient in Q1 was a quarterly fluctuation, not a systemic trend, and that underlying patient metrics remain unchanged.

Caitlin Cronin asked about the MACI commercial team's strategy for the MACI Arthro ramp-up in 2025 and plans for a sales force sizing exercise. She also inquired about the expected timeline for Vericel's OUS (ex-US) expansion.

Answer

CEO Dominick Colangelo confirmed the MACI Arthro launch is a high priority for the sales force in 2025 and that a sales force sizing analysis will be refreshed this year, with any major changes likely implemented in 2026. Regarding OUS expansion, he clarified that while the new facility will be ready in 2026, commercial launches are more likely a 2027-2028 opportunity due to regulatory timelines.

Caitlin Cronin asked about the long-term surgeon penetration potential for MACI with its newly expanded target base. She also requested an update on the number of dormant Epicel accounts that have been reactivated.

Answer

CEO Nick Colangelo stated that Vericel has historically reached about 50% penetration of its target surgeon base before expanding it and expects a similar dynamic with the new 7,000-surgeon base. Regarding Epicel, he noted that while there is opportunity, the number of actively treating centers (40-50 annually) has not markedly changed yet, though 70-80 centers typically provide biopsies.

Caitlin Cronin of Canaccord Genuity Inc asked for more details on the urology market opportunity, including sales strategy, and inquired if the revised guidance still reflects a larger sales mix from outside the U.S.

Answer

CEO Moshe Mizrahy clarified that the urology platform is launching with indications for blood circulation and pain relief while awaiting a key FDA indication for erectile dysfunction. CFO Yair Malca confirmed that the guidance incorporates a revised geographic mix, with the historical 65% U.S. share now closer to a 50/50 split between U.S. and OUS sales for the remainder of the year.

Caitlin Cronin from Canaccord Genuity asked for updated guidance on operating expenses, given the company's commitment to maintaining its sales force amid macro challenges, and requested an update on the U.S. management structure.

Answer

CFO Yair Malca confirmed that InMode will proceed with all planned investments, including team expansions. He noted that the geographic revenue mix shifting away from the U.S. is expected to negatively impact profitability by approximately 4% to 5%. CEO Moshe Mizrahy added that he is still serving as the acting President of North America and travels to the U.S. monthly, with no new hire yet announced.

Caitlin Cronin requested specifics on the U.S. consumables and services performance for the quarter. She also asked for more color on the nature of the planned capital return for the year and whether it would be tax-efficient.

Answer

CEO Moshe Mizrahy clarified that the approximate 20% revenue decline in 2024 was consistent across all territories, including North America. CFO Yair Malca and CEO Moshe Mizrahy explained that the newly announced 10% share repurchase is structured to be tax-efficient, similar to past programs. They noted that any additional, significant capital return is still being evaluated with advisors to maximize tax efficiency, referencing Israeli tax laws on buybacks.

Caitlin Cronin asked for the U.S. consumables growth figure for the quarter and requested more color on the previously announced plans to move some manufacturing operations out of Israel.

Answer

CEO Moshe Mizrahy corrected that U.S. consumable sales had decreased, not grown, attributing it to a 40% drop in high-cost minimally invasive procedures due to macroeconomic pressures. Regarding manufacturing, he explained that despite exploring options in Europe, they found no alternative facilities with the required regulatory approvals to handle their products, and therefore, operations will remain in Israel.

Caitlin Cronin questioned the 2025 EOS guidance, which implies a growth rate similar to 2024, and asked whether an inflection in growth could be expected soon, driven by EOS Insight or other enabling technologies.

Answer

Patrick Miles (Executive) stated that an inflection is expected, but the timing is the main challenge. He noted the reception to EOS Insight has been outstanding, but the company is in the early phase of its rollout. J. Koning (Executive) added context, explaining the $75 million guide is a step towards the long-range plan of $100 million in 2027, and he expects interest and placements to grow as EOS Insight gains adoption, driving more implant pull-through.

Caitlin Cronin inquired if the record EOS orders were from new users or upgrades, and why the EOS revenue guidance remained unchanged despite the strong order volume.

Answer

Executive Patrick Miles confirmed the orders reflect great enthusiasm for EOS Insight and are primarily from new institutions, which provides access for implant pull-through. Executive J. Koning clarified that while the order book is strong, revenue recognition has a lead time. He noted the implied Q4 EOS revenue of $18 million is a step-up from the consistent ~$15 million in recent quarters, reflecting confidence backed by the strong order book.

The analyst inquired about the specifics of the restructuring program's cost savings expected in Q4 and whether the $8 million annualized target is still expected. She also asked about the likely quarterly cadence of EBITDA positivity in 2025.

Answer

The CFO confirmed the $8 million annualized savings from the restructuring are on track, with the main impact in Q4, supplemented by ongoing cost optimization efforts like zero-based budgeting. Regarding 2025 EBITDA, he noted that while seasonality will affect quarterly results (with higher expenses in H1), they expect significant year-over-year improvement and are confident in achieving full-year positivity.

Asked for more detail on the macroeconomic 'choppiness' and its geographic scope, as well as the timeline for the full launch of the Smart 28 Bun-Yo-Matic module and future additions.

Answer

Management attributed the 'choppiness' to a return to normal seasonality with summer vacations, which may linger into Q3, rather than a specific economic issue. Regarding Smart 28, they are excited about the pilot launch, highlighting its ease of use and FDA clearance for both CT and X-ray. A more fulsome launch is expected in the second half of 2024, with the long-term goal of expanding the technology across the entire foot and ankle portfolio.

Asked for thoughts on a competitor's new technology (Stryker's footprint), whether Smart28 will compete with it, and the expected cadence of adjusted EBITDA throughout 2024.

Answer

The company views preoperative planning technology as a positive for the market and aligned with their Smart28 goals. They expect adjusted EBITDA to scale with revenue throughout 2024, with continued operating leverage.