Daniel Stauder • JMP Securities

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CFO Lance Berry confirmed a meaningful uptick in On-X growth from new accounts but noted it is difficult to parse the exact contribution between the AMDS cross-selling effect and the impact of new clinical data. Regarding cash flow, he stated that while timing can cause quarterly fluctuations, the company is on track to achieve its goal of being free cash flow positive for the full year.

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CFO Lance Berry explained that while the previous guidance included a 2% FX headwind, current rates would make the impact closer to neutral, representing potential upside. He confirmed the full-year EBITDA drivers remain the same: approximately 100 bps of gross margin expansion from AMDS mix, SG&A leverage, and R&D spend toward the higher end of the 7-8% of sales target. He noted these dynamics should continue into 2026.

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CEO James Mackin confirmed the H2 2025 growth trajectory, citing the AMDS ramp, recovery of delayed sales, and an easy Q4 comp. CFO Lance Berry detailed the EBITDA margin drivers, attributing approximately 1 percentage point of improvement to gross margin from AMDS, 2 points from SG&A leverage, partially offset by a 1 point increase in R&D spending.

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CEO James Mackin explained that the stent graft business is seeing double-digit growth across nearly its entire differentiated portfolio globally. Regarding On-X, Mackin noted the company continues to take market share both in the U.S., where it holds about 55% share, and internationally. He attributed this to strong clinical data from a post-approval trial showing an 87% reduction in major bleeding, reinforcing his belief that On-X will remain a double-digit growth product.

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CFO Dorian LeBlanc stated that cash from operations should track with operating income over the long term and that CapEx should remain stable. Chairman & CEO George LeMaitre noted that the current 6% R&D spend is low due to the completion of MDR projects, calling it a 'peace dividend,' but acknowledged it would likely rise from this level over time.

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CEO George LeMaitre attributed the higher S&M spend to the annual Q1 sales meeting (approx. $1M) and a significant year-over-year increase in sales reps from 137 to 164. Executive Dorian LeBlanc suggested Q1 CapEx was standard. LeMaitre added that the company is now focused on reducing its large inventory balance, which could free up cash flow. However, inventory for Artegraft and RestoreFlow was built up in Q1 in anticipation of European launches.

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CEO George LeMaitre and EVP, CFO & Treasurer Joseph Pellegrino pointed to the company's history of outperforming its initial organic growth guidance. They cited variable ASPs, the cadence of sales rep hiring, and the performance of key product lines as factors influencing the range. For operating margin, Pellegrino explained that Q1 is typically lower due to the significant expense of annual sales meetings, suggesting a more favorable margin profile in the subsequent three quarters.

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CEO George LeMaitre highlighted the allograft business (up 47%) and market exits by European competitors as key tailwinds. CFO Joseph Pellegrino added that new direct markets in Korea and Thailand were strong contributors. President Dave Roberts noted that an increased number of sales managers is improving rep oversight. The company confirmed plans to add more reps in Europe.

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SVP & CFO Scott Galovan and VP Jason Pickett explained that strong performance in the core Specialty Nutrition and Pain Management segments, coupled with easing currency headwinds, offset the revenue loss from the divested hyaluronic acid business, allowing for the guidance reaffirmation. CEO Dave Pacitti attributed the nearly 14% growth in RF ablation to a dedicated company focus, a three-tiered product offering, and strong sales execution, which he sees as sustainable. Regarding the divestiture's margin impact, executives noted the business faced significant price pressure, making its removal from the portfolio not materially impactful to the bottom line.

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CEO David Pacitti projected mid-single-digit growth for the Specialty Nutrition Systems segment and flat to low-single-digit growth for the Pain Management & Recovery segment for the full year. Interim CFO Jason Pickett and executive Scott Galovan confirmed the $65 million full-year free cash flow guidance explicitly excludes tariff impacts. Pickett clarified that Q1's strong $19 million in free cash flow included approximately $9 million in one-time benefits and should not be used as a quarterly run rate.

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Interim CEO Michael Greiner detailed the 2025 outlook by segment, highlighting new launches like CORGRIP SR in Digestive Health and volume share gains in HA. He noted strong international growth for COOLIEF and continued momentum in the IVP business, supported by the Diros acquisition. For Game Ready, Greiner attributed its success to both favorable comps and absolute dollar growth, outlining new strategies like a direct-to-consumer approach and an improved rental model to drive future performance.

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EVP and CFO Steven Pfanstiel addressed the per-site revenue, stating that while there isn't a specific target, the company expects clinic revenue to remain about 60% of the total business and sees upward potential from volume growth and site expansion. President and CEO Keith Sullivan explained that for the adolescent market, the company uses its 'Provider Connection Program' to directly target and educate healthcare providers who are already known to treat adolescent patients, leading to more effective referrals.

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Executive Stephen Furlong stated that the company deliberately accelerated the buy-and-bill conversion in Q1, using proceeds from its recent financing. To mitigate the cash impact, he is in the process of increasing the company's credit line with a Letter of Credit (LOC). He also highlighted favorable 120-day payment terms with distributors against an anticipated 60-day collection cycle, which should prevent the program from becoming a cash flow issue once it reaches a regular cadence.

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CFO Steve Furlong clarified that SPRAVATO capital expenditure is minimal at ~$10,000 per clinic, though inventory could reach $5 million, which will be managed through 120-day distributor credit terms. He stated Greenbrook averages 4 treatments/day versus 6-8 for BMP partners, with a goal to increase Greenbrook's rate. CEO Keith Sullivan added that they aim to enroll all qualifying sites into the BMP program, viewing 30-50 new additions by April as a success.

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CFO Stephen Furlong explained the additional $5 million in synergies came from the recent strategic reorganization within Neuronetics. He stated that he does not believe the $20 million synergy target is a ceiling and expects it could increase post-close. Furlong expressed comfort with the current cash position and forecasted burn, noting they are in discussions with their lender, Perceptive Advisors, about a potential future debt draw but that current models show a sufficient cash balance.

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CFO Angela Wirick identified Flex Mini as the main U.S. growth driver but noted a halo effect benefiting the legacy FlexV product. For pain management, she projected the franchise would "well outperform" overall company growth for the rest of the year, though the 40% growth rate might moderate due to more difficult year-over-year comparisons.

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CFO Angela Wirick clarified that Cryo Nerve Block is now used in about 600 accounts, with a total U.S. target market of 1,200-1,300 accounts. CEO Michael H. Carrel explained that the cryoXT launch will be methodical and slower than recent launches, with a focus on perfect case execution and learning in the first year. Significant revenue contribution is not expected until mid-to-late 2026.

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CFO Angela Wirick confirmed the guidance assumes a year-over-year revenue decline for the U.S. MIS businesses, with the most pressure in H1 2025. CEO Michael H. Carrel explained that for pain management, the company already has the necessary labeling and is developing a new device for the amputation market, which he described as a multi-hundred million dollar opportunity.

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