David Roman

David Roman asked for an update on the adoption curve of multi-module products, noting the rapid evolution in commentary since the last quarter. He also requested a breakdown of user engagement mix across the platform's different features and how that has evolved.

Answer

CEO Jeff Tangney responded that multi-module products are performing very well, with point-of-care/formulary expected to be a nine-figure business this year, yet adoption is still in the low double-digit percentage of brands, indicating significant room for growth. Regarding engagement, he clarified they have a News Feed, not a newsletter, which just hit a new record of over 1 million unique prescribers with a 30% YoY increase in articles tapped.

David Roman inquired about the drivers of total revenue growth outpacing the NRR of top customers and asked where Doximity stands in the lifecycle of the factors supporting its accelerated performance.

Answer

CFO Anna Bryson explained that growth is coming from both existing customers expanding their programs and stronger-than-historical growth from SMB clients. CEO Jeff Tangney added that Doximity's performance reflects a market realization that 'context matters,' suggesting clients are returning to Doximity's high-integrity clinical platform after trialing less effective channels.

David Roman inquired about the adoption trajectory of Type 2 diabetes patients in the U.S. since its August 2024 indication, seeking insights into uptake and future segment expectations. He also asked how direct-to-consumer (DTC) advertising investments are translating into new patient starts and Type 2 adoption.

Answer

Ashley McEvoy (President and CEO) noted the large Type 2 total addressable market (TAM), leveraging Insulet's Type 1 strength, a 26% sequential increase in Type 2 prescribers, 100% year-over-year and 26% sequential growth in new customer starts (NCS) for Type 2, strong science, and significant DTC investment yielding leads from non-sales-force-called-on providers.

David Roman inquired about the adoption trajectory of Type 2 patients since the U.S. indication in August 2024, the future outlook for this segment, and how direct-to-consumer (DTC) advertising investments are translating into new patient starts and revenue, particularly for Type 2.

Answer

Ashley McEvoy, President and CEO, highlighted the large Type 2 market opportunity, leveraging Insulet's 25 years of Type 1 experience. She noted a 26% increase in the Type 2 prescriber base, 100% year-over-year and 26% quarter-over-quarter growth in new customer starts for Type 2, driven by strong science and meaningful DTC investments generating leads.

David Roman asked for more detail on the plan to increase capital expenditures, questioning if this acceleration is a direct reflection of global demand tracking ahead of original expectations.

Answer

Ashley McEvoy, Director, President & CEO, confirmed the plan, framing it as consistent with Insulet's history of investing in manufacturing capacity ahead of demand. She highlighted the successful ramp-up of facilities in Acton, MA, and Malaysia, and stated that continued investment in the supply chain is necessary to stay ahead of the curve and meet future global demand.

David Roman of Goldman Sachs asked for more detail on the plan to increase capital expenditures, questioning how demand has shaped up relative to original expectations and if the investment signals a belief in sustained high growth.

Answer

President and CEO Ashley McEvoy confirmed the move reflects Insulet's historical strategy of investing in manufacturing capacity ahead of demand. She cited the successful scaling of facilities in Acton, MA, and Malaysia as evidence of this approach. The planned increase in CapEx is to continue building out the global supply chain to meet anticipated future global demand.

David Roman asked for more detail on Dexcom's strategy and investments to ensure clear and consistent communication about G7 performance improvements across its broad stakeholder base, given the consumer element of the category.

Answer

Jake Leach, President and Interim CEO, explained that Dexcom is communicating directly with prescribers and users in the field. He noted that while overall complaint rates were stable, an early-year increase in 'out-of-box failures' was offset by decreases in accuracy and Bluetooth complaints. He anticipates overall complaint rates to decrease as deployment issues are resolved and emphasized investments in the service platform and digital experience to ensure clear messaging and competitive advantage.

David Roman asked for more detail on Dexcom's actions to ensure clear messaging about G7 performance improvements within the broader community, especially given the consumer element of the category and diverse stakeholders.

Answer

Jake Leach, President and Interim CEO, explained that direct engagement with prescribers and users is a primary communication point. He clarified that while overall complaint rates have been stable, out-of-box failures increased earlier in the year but were offset by decreases in accuracy and Bluetooth complaints. With deployment issues resolved, they anticipate overall complaint rates to decrease. Investments in the My Dexcom Account digital service platform are also key to improving the customer experience.

David Roman of Goldman Sachs inquired about patient utilization rates as Dexcom expands into the Type 2 non-insulin population and the strategies being used to drive retention.

Answer

EVP & CFO Jereme Sylvain noted that utilization among covered Type 2 users is high, at 75-80%. He explained that retention is driven by value-added software features like the Oura Ring integration and AI-powered meal logging, which provide actionable insights and help users manage their health more effectively.

David Roman asked Andrew Heider about his vision for Baxter's identity as a Medtech or diversified manufacturing company, and what decisions will align with this vision. He also asked Joel Grade about the P&L implications of growth drivers, particularly lower-margin segments like compounding, on 2025 guidance.

Answer

President and CEO Andrew Heider stated that capital allocation would be the framework for success, deferring detailed strategic insights to the 2026 Investor Day. EVP and CFO Joel Grade acknowledged mix challenges, noting strong Advanced Surgery performance. He attributed P&L impacts to Novum LVP hold, slower IV Solutions recovery, and softness in U.S. injectables due to protocol shifts, with bottom-line impacts reflecting volume declines.

David Roman from The Goldman Sachs Group, Inc. asked CEO Andrew Heider about his long-term vision for Baxter, specifically whether he views it as a Medtech company or a diversified manufacturing company, and how future capital allocation decisions will align with this identity. Roman also questioned CFO Joel Grade on the implications of growth drivers, particularly lower-margin segments like compounding, on the P&L, Q4, and the updated 2025 guidance.

Answer

President and CEO Andrew Heider emphasized capital allocation as the framework for success, prioritizing investment back into the business to drive high value for customers, employees, and shareholders. He deferred a detailed strategic vision to the 2026 Investor Day. EVP and CFO Joel Grade acknowledged challenges with product mix, noting strong performance in the higher-margin Advanced Surgery business. He attributed the updated guidance to pressures from the Novum IQ pump hold, slower-than-expected recovery in U.S. IV Solutions demand, and softness in certain Premix products within Injectables, with bottom-line impacts primarily reflecting volume declines.

David Roman from Goldman Sachs asked about the evolution of business trends during Q2, questioning if they worsened materially, and inquired about the interplay between TSA income and stranded costs.

Answer

EVP & COO Heather Knight noted that while IV Solutions performed as expected, U.S. Injectables saw unexpected softness, leading to more conservative guidance. EVP & CFO Joel Grade confirmed Q2 was the toughest comparison and stated that the company is on track to mitigate stranded costs by 2027, staying ahead of the 24-month TSA roll-off period.

David Roman of Goldman Sachs asked about the evolution of business trends throughout the second quarter, questioning if the exit growth rate was below the reported 1% operational growth. He also inquired about the interplay between TSA income and stranded costs, specifically how the company plans to avoid a margin gap as TSAs roll off.

Answer

EVP & COO Heather Knight explained that IV Solutions trends played out as expected, but softness in U.S. Injectables was a surprise, leading to a more prudent second-half outlook. EVP & CFO Joel Grade noted that Q2 was expected to be the toughest comparison and that the company is on track with its stranded cost mitigation plans, which are designed to stay ahead of the roughly 24-month TSA rolloff period.

David Roman inquired about the expected business impact of removing hospitals from IV solutions allocation and whether inventory management has structurally changed. He also sought to frame the potential exposure to future pharmaceutical tariffs.

Answer

COO Heather Knight explained that while some hospitals are conserving IV solutions, the company has factored this into its forecast and expects utilization to improve as allocations are lifted. EVP & CFO Joel Grade noted that potential pharma tariff impacts are being proactively evaluated through scenario planning, but stated that imports from the Claris plant are not material.

David Roman asked for the specific drivers that would accelerate revenue growth from the ~4% seen in mid-2024 to the 4-5% guided for 2025. He also inquired about the trajectory of internal capital allocation for SG&A and R&D into 2025.

Answer

CEO José Almeida identified the primary driver for growth acceleration as the normalization of the Healthcare Systems & Technologies (HST) segment, particularly the Front Line Care business, as market and operational headwinds subside. CFO Joel Grade stated that while R&D investment will see modest growth to fuel innovation, the company expects to gain operating leverage on the SG&A line in 2025 as cost-containment measures take effect.

David Roman inquired about GE HealthCare's opportunities in Advanced Visualization Solutions (AVS), particularly with EP procedures moving to Ambulatory Surgical Centers (ASCs), and the operational dynamics of the R&D to COGS transition, its duration, and the future trajectory of gross margins and R&D.

Answer

President and CEO Peter Arduini detailed GE HealthCare's D3 strategy for cardiology, emphasizing leadership products like ALIA pulse and Vivid Pioneer, which are well-suited for ASCs and supported by new reimbursement models. VP and CFO Jay Saccaro explained that the 300 basis point gross margin decline included 180 basis points from tariffs and 60 basis points from R&D reclassification to COGS (approximately $30 million), a positive sign as 12 products near commercialization. He noted this dynamic would continue into Q4 and next year, but overall R&D spending was up, and the company expects margin expansion in Q4.

David Roman inquired about opportunities in Advanced Visualization Solutions (AVS), specifically regarding EP procedure volumes moving to ASCs and GE HealthCare's offerings. He also asked about the duration and operational dynamics of the R&D to COGS transition and its impact on gross margins and R&D trajectory.

Answer

President and CEO Peter Arduini highlighted GE HealthCare's strong position in EP with products like Allia pulse, Vivid Pioneer, and Mac-Lab AltiX, leveraging new reimbursement in ASCs. VP and CFO Jay Saccaro explained the R&D to COGS reclassification is due to products nearing commercialization, impacting gross margin by 60 basis points in Q3, and will continue into Q4 and next year, but is net neutral to adjusted EPS.

David Roman of Goldman Sachs questioned how the launch of Flurcato is creating a halo effect for the broader nuclear medicine portfolio, including PET/CT systems, and asked for a clearer algorithm on how backlog and book-to-bill convert into future revenue.

Answer

President & CEO Peter Arduini confirmed strong double-digit order growth across the nuclear medicine portfolio, driven by excitement for new therapeutics and diagnostics. VP & CFO James Saccaro explained that conversion times vary, with flow products like Ultrasound converting in 1-2 quarters, while larger project-based Imaging systems have a 9-12 month lead time from order to sale.

David Roman asked about the magnitude of tariff mitigation actions already in place versus those yet to be implemented, and how the company is balancing this with sustained investment in R&D and SG&A. He also inquired about the M&A environment.

Answer

CFO James Saccaro stated the company is controlling discretionary spending while protecting key R&D and commercial investments, with a clear line of sight on 2025 mitigation savings. CEO Peter Arduini gave examples of mitigation levers like shifting production between plants. On M&A, Arduini confirmed it's a prime environment and the company is actively looking for tuck-in acquisitions to drive growth.

David Roman asked about the Advanced Visualization Solutions (AVS) business, seeking to understand the drivers of its growth inflection in Q4 and its outlook. He also asked for clarification on the factors behind the Q4 free cash flow decline and its expected reversal in 2025.

Answer

CEO Peter Arduini attributed the AVS strength to strong performance in both ultrasound, driven by new platforms, and interventional systems, where the Allia IGS Pulse cath lab and OEC surgical C-arms are exceeding expectations. CFO Jay Saccaro explained the free cash flow decline was due to a strategic inventory build late in the year and that the company sees an opportunity to optimize and reduce these levels in 2025, which will drive cash flow improvement.

David Roman of Goldman Sachs Group, Inc. asked for a deconstruction of the Pharmaceutical Diagnostics business into its components (capital, software, service, radiopharma) and their growth levers. He also inquired about the building blocks for the 2025 P&L, specifically regarding the normalization of R&D growth and any one-time SG&A effects like incentive compensation.

Answer

CEO Peter Arduini detailed the integrated nature of the PDx business, spanning proprietary molecules, specialized imaging equipment like PET/CT and StarGuide, and digital integration tools from its MIM acquisition. CFO Jay Saccaro addressed the 2025 P&L, stating that R&D growth will likely move closer in line with sales, and he does not expect a dramatic one-time step-up in variable compensation, as it tends to move with sales performance.

David Roman asked for an update on the surgical business, specifically the trajectory of the enVista IOL launch, the impact of the recent recall on its overall performance, and the outlook for the business heading into Q4 and next year. He also inquired about the sustainability of SG&A leverage and the balance between reinvesting for growth and driving financial leverage.

Answer

Chairman and CEO Brent Saunders reported impressive and faster-than-expected recovery for the enVista IOL platform, with Q3 total enVista sales reaching 82% of Q1 pre-recall levels and MV sales at 91%. He noted that the implantable portfolio was up 14% sequentially and premium IOLs up 67% sequentially. Regarding SG&A, Mr. Saunders stated the goal is sustainability, driven by OpEx discipline, products transitioning from launch to growth mode, and improved product mix. CFO and EVP Sam Eldessouky added that Q3 SG&A hit its lowest point this year at approximately 40% of revenue, a 290 basis point sequential decrease, setting a new foundation for future margin expansion.

David Roman asked for an update on the surgical business, specifically the Invista IOL launch, the impact and recovery trajectory post-recall, and the directional outlook for Q4 and next year. He also followed up on the sustainability of SG&A leverage and the balance between reinvesting for growth and driving financial leverage.

Answer

Chairman and CEO Brent Saunders reported impressive and faster-than-expected recovery for the Invista IOL platform, with total Invista sales reaching 82% of pre-recall Q1 levels in Q3 2025, and MV sales surpassing Q1 monthly averages in September. He and CFO and EVP Sam Eldessouky affirmed the sustainability of SG&A leverage, driven by Vision 27, products transitioning to growth mode, and favorable product mix, while still increasing R&D investment by 13% in Q3.

David Roman asked for insights into the business dynamics outside of the highly focused EP and Watchman segments, seeking to understand the growth drivers supporting the rest of the portfolio, including Neuromodulation, Endoscopy, and improvements in Silk Road, and where product focus should be directed.

Answer

Chairman and CEO Mike Mahoney acknowledged the attention on EP and Watchman but highlighted strong performance across other divisions. He noted healthy 8% growth in MedSurg (Endoscopy) with new launches expected in 2026, anticipated strengthening in Urology (Exonics) in Q4 and 2026, and strong 9% growth in Neuromodulation, bolstered by the Nalu acquisition which creates a differentiated pain portfolio. Mahoney also pointed to the transformed ICTX business, driven by imaging and Agent, with significant investments in IVL for peripheral interventions (limited launch end 2025, full benefit 2026) and cardiology (launch early 2027). He also mentioned double-digit growth in Interventional Oncology and Venous portfolios.

David Roman from Goldman Sachs requested an expanded discussion on the dynamics within Boston Scientific's businesses outside of EP and WATCHMAN, seeking to understand the key drivers supporting the growth outlook for the rest of the portfolio, including neuromodulation, endoscopy, and peripheral interventions, and identifying specific product areas of focus.

Answer

Chairman and CEO Mike Mahoney acknowledged the focus on EP and WATCHMAN but highlighted strong performance across other divisions. He noted MedSurg's healthy 8% growth, driven by endoscopy, with strong expectations for 2026 due to alliances and product launches. Urology is expected to strengthen in Q4 and 2026 with easier comps and improved Axonics performance. Neuromodulation achieved 9% growth, bolstered by the Nalu acquisition, which creates a differentiated pain portfolio. ICTx has transformed into a high-growth business led by imaging and AGENT, with significant investments in IVL for PI (limited launch late 2025, full benefit 2026) and cardiology (launch early 2027). Interventional Oncology and Venous portfolios also showed double-digit growth.

David Roman from Goldman Sachs requested a deeper dive into the evolution of the EP portfolio, asking about the runway for growth from indication expansion and new products like mapping and Farapoint. He also followed up on the P&L, questioning if the company is now at a point to deliver more operating leverage given strong top-line growth.

Answer

CMO Dr. Ken Stein detailed the strategy for EP category leadership, which includes a complete toolkit with mapping, access solutions, and a pipeline of new catheters like Farapoint and FarraFlex. CEO Mike Mahoney added that regional growth in Japan and China is a key focus. CFO John Monson explained that while OpEx was managed in Q2 to offset headwinds, the company will continue to reinvest for growth in H2, and he expressed confidence in delivering the full-year target of 75-100 basis points of operating margin expansion.

David Roman of Goldman Sachs inquired about the growth trajectory for the MedSurg business, asking for the key drivers that will accelerate its organic growth from the current mid-single-digit rate back towards a high single-digit rate.

Answer

Michael Mahoney, Chairman and CEO, clarified that the underlying growth was closer to 7% when adjusted for selling days. He anticipates improvement in Neuromodulation driven by new products and expects Endoscopy to remain consistent. While Urology is facing some temporary supply chain headwinds in 2025, he expects the overall MedSurg portfolio to deliver healthy, balanced growth, with Endoscopy and Neuromodulation growing above market.

David Roman asked for details on the growth drivers for the Electrophysiology business beyond the initial paroxysmal AF segment, focusing on the market expansion potential from a persistent AF indication and the FARAPOINT catheter, and also inquired about the company's mapping platform strategy.

Answer

CMO Dr. Ken Stein clarified the strategy is to maintain an open mapping platform while offering differentiated features on their proprietary OPAL system. He noted the persistent AF population is as large as the paroxysmal segment and expects a label for this indication by year-end. Future growth drivers include FARAPOINT for atrial flutter, the AVANT GUARD trial for first-line therapy, and the REMATCH trial for repeat ablation procedures.

David Roman from Goldman Sachs asked about the performance, resource allocation, and future growth drivers for the company's franchises outside of the high-growth EP and WATCHMAN businesses.

Answer

CEO Michael Mahoney emphasized the company's decentralized structure, with dedicated global teams focused on businesses like Peripheral Interventions, Endoscopy, and Urology. He stated that significant investment in PFA has not detracted from investments in these foundational businesses, which continue to have rich organic pipelines and benefit from strategic M&A like Silk Road and Axonics.

David Roman asked about the application of haptics and force feedback technology with Da Vinci 5, specifically in which procedure categories it is most applicable, and how it aligns with the strategy of making robotic surgery ubiquitous. He also sought clarification on the performance of Ion and SP platforms, given their 50% and 91% procedure growth rates respectively, and how recent SP clearances might impact future growth.

Answer

Dave Rosa, CEO, explained that the journey of force feedback involves demonstrating lower forces in surgery, then connecting that to improved patient outcomes or accelerated learning, which will vary by procedure (e.g., functional outcomes in prostatectomy, bowel function recovery in colorectal procedures). He emphasized that this evidence will be the catalyst for broader adoption and impact on the quintuple aim. Regarding SP, Dave Rosa, CEO, highlighted its strong growth, growing body of evidence for patient value beyond cosmesis, and high utilization in Korea. He stressed the team's focus on software/instrument enhancements and securing more U.S. clearances to drive future growth.

David Roman of Goldman Sachs asked for an update on the U.S. hospital capital spending environment, particularly concerning potential Medicaid policy changes, and inquired about the da Vinci V Force Feedback launch, including customer evaluation, capacity, and its impact on INA per procedure.

Answer

CFO Jamie Samath noted it's too early to see impacts from Medicaid changes but acknowledged potential hospital budget pressures, positioning da Vinci as a solution to improve efficiency. He highlighted strong U.S. placements (up 45%) but challenges in Japan and Europe. Head of Investor Relations Dan Connally stated that the supply of force feedback instruments will be constrained through Q1 2026. Jamie Samath added that da Vinci V-specific INA, including force feedback, was a minor positive contributor to the INA per procedure metric in Q2.

David Roman of Goldman Sachs asked for an update on the U.S. hospital capital spending environment, particularly concerning potential Medicaid policy changes, and inquired about the da Vinci V Force Feedback launch, including customer evaluation, capacity, and its impact on INA per procedure.

Answer

CFO Jamie Samath noted it's too early to see impacts from Medicaid changes but highlighted Intuitive's ability to be part of the economic solution for hospitals. He confirmed U.S. placements were strong while OUS faced challenges. VP & Head of Investor Relations Dan Connally stated Force Feedback instrument supply will be constrained through Q1 2026. Jamie Samath added that da Vinci V-specific instruments, including Force Feedback, were a minor positive contributor to INA per procedure this quarter.

David Roman asked for an expansion on the comment that Intuitive is 'part of the solution' for hospitals, particularly in the context of a potentially worsening hospital CapEx environment and external pressures like potential Medicaid cuts.

Answer

Executive Gary Guthart explained that for well-run programs, da Vinci offers an outstanding 'total cost to treat' that is often better than open or laparoscopic surgery, along with superior outcomes. He acknowledged the challenge arises from the disconnect between operating budgets, which see the savings, and constrained capital budgets. The company's strategy is to first help customers improve utilization of existing assets. He concluded that because high-quality MIS is economically beneficial, hospitals are motivated to do more of it, positioning Intuitive as a key partner.

David Roman asked whether the commentary on competition potentially lengthening selling cycles was a current observation or a theoretical future risk. He also inquired about the long-term opportunity to increase the instruments and accessories (I&A) revenue per procedure, particularly with new capabilities like force-sensing on the da Vinci 5.

Answer

CFO Jamie Samath clarified that lengthened selling cycles due to competition is something they have 'seen it clearly in China' and are acknowledging as a possibility elsewhere as more competitors enter the market. Regarding I&A per procedure, CEO Gary Guthart explained they add value-creating integrated technologies. However, Samath noted that while new instruments like force feedback will add revenue, the larger driver is procedure mix. He expects I&A per procedure to 'drift down slowly' as lower-cost benign procedures grow.

David Roman requested an overview of the Ion platform's launch and adoption curve in the U.S. and Europe, and asked about the P&L implications of the increasing percentage of systems being placed under usage-based operating lease agreements.

Answer

CEO Gary Guthart described the Ion launch as being in two phases: in the U.S., it has 'crossed the chasm' with a focus now on utilization and new indications, while in Europe and China, it is at the very beginning of its journey. CFO Jamie Samath explained that usage-based arrangements are popular with customers for accessing capacity without capital budget consumption and expects the trend to continue, though the growth rate may moderate in the highly penetrated U.S. market.

David Roman asked about the underlying drivers for an overall acceleration in the diagnostics business, beyond the moderating headwinds from China VBP, DRG updates, and COVID testing. He also sought clarification on the P&L's gross margin trajectory, distinguishing operational performance from tariff and foreign exchange impacts.

Answer

Chairman and CEO Robert Ford stated that diagnostics outside China continue to accelerate, with U.S. growth at 10% in Q3 driven by new business capture and competitive Alinity system rollout. He expects a nice recovery year for diagnostics in 2026 as China headwinds subside. Executive Vice President, Finance and CFO Phil Boudreau explained that Q3 gross margin reflected normal plant maintenance shutdowns and the first meaningful impact of tariffs, but mitigation efforts are on track to maintain a 57% outlook.

David Roman focused on the diagnostics business, asking about the moderation of headwinds from China VBP, DRG updates, U.S. aid, and COVID testing, and the underlying drivers for an expected acceleration. He also sought clarification on the P&L, specifically decomposing gross margin performance from tariffs and FX, and the future margin trajectory.

Answer

Robert Ford, Chairman and CEO, stated that China diagnostics headwinds (VBP, DRG) are not worsening, with some volume pickup signs and expected lapping by Q4 2025. He highlighted accelerating growth outside China, with U.S. core lab diagnostics up 10% in Q3, Europe 6-7%, and Latin America mid-teens, driven by new business capture and competitive Alinity system rollout. Phil Boudreau, EVP, Finance and CFO, explained that Q3 gross margin reflected normal plant maintenance shutdowns and the first meaningful impact of tariffs. He noted ongoing mitigation efforts and reaffirmed the 57% gross margin outlook, with 60 basis points of year-to-date expansion.

David Roman from Goldman Sachs asked for context on Abbott's 2025 performance, questioning whether headwinds in Diagnostics are transient and if growth could accelerate into 2026 with new product launches.

Answer

Chairman and CEO Robert Ford acknowledged transitory headwinds of over $1 billion from COVID testing, China's Core Lab market, and HIV testing funds. He emphasized that despite these, the company maintains its high single-digit growth forecast, driven by over 12% growth in Medical Devices. Ford stated these headwinds should resolve by 2026, positioning Abbott for potential growth acceleration fueled by a strong product pipeline, including Volt and Tactiflex Duo.

David Roman inquired about the strategy to re-accelerate the Diagnostics business, the key products involved, and the role of M&A in both Diagnostics and overall capital allocation.

Answer

Chairman and CEO Robert Ford acknowledged challenges in Diagnostics due to COVID-19 testing declines and unique volume-based procurement (VBP) price pressures in China. He noted the business grew 7% ex-China. A key organic growth driver is the new Alinity m nucleic acid testing system for the blood screening market. Regarding M&A, Ford reiterated a disciplined focus on medical devices and diagnostics, stating the company's strong organic growth allows it to be selective and that its capital allocation framework remains unchanged.

David Roman asked for a breakdown of the drivers within the high-growth Structural Heart business and for context on the 2025 growth outlook given headwinds like VBP in China.

Answer

CEO Robert Ford explained that the Structural Heart business, now a $2.5 billion portfolio, has diversified beyond MitraClip. He cited strong, double-digit growth from Amulet and TriClip, as well as positive momentum from the Navitor TAVR system. Regarding headwinds, Ford acknowledged the impact of volume-based procurement (VBP) on the Diagnostics business in China but emphasized that the company's broad portfolio of tailwinds far outweighs this single issue, allowing for a robust overall growth forecast.

David Roman asked about the drivers behind the accelerated R&D and SG&A spending in the quarter, the forward-looking trajectory of operating expenses, and the strategy behind the newly announced share repurchase program.

Answer

Robert Ford, Chairman and CEO, explained that investments are being strategically allocated to high-growth areas like MedTech and Diagnostics, not as a blanket increase. He noted that operating expense leverage has improved over time. Regarding the buyback, he described it as part of a balanced capital allocation strategy and a tool to address what he sees as a disconnect between the company's performance and its valuation.

David Roman asked how HealthEquity reconciles the potential for increased HSA enrollment due to significant premium increases next year with current macroeconomic conditions, and how these countervailing factors might impact mid-single-digit HSA growth.

Answer

Scott Cutler, President and CEO, explained that rising healthcare costs make the HSA value proposition stronger for employers, especially in challenging macro environments. He emphasized the long-term value of engaged members and the company's mission over short-term macro effects, which he believes do not have a long-term impact on the business.

David Roman asked about the trend of HSA member growth from smaller employers and its implications for future growth, and also inquired about capital allocation priorities between M&A and internal investment.

Answer

President and CEO Scott Cutler acknowledged stronger growth from the SMB segment but emphasized the overall strategy remains focused on leveraging technology to support the sales team across all segments. Regarding capital allocation, he stated there is a 'very high bar' for M&A, with a preference for portfolio acquisitions, and that the primary focus is on organic growth and execution.

David Roman of Goldman Sachs inquired about HealthEquity's capital allocation priorities, covering internal investments in technology and sales, external M&A, and how these factors align with the fiscal 2026 growth outlook.

Answer

An executive, likely CFO James Lucania, clarified that the fiscal 2026 guidance does not assume any M&A. He reiterated the company's disciplined approach, operating within established spending envelopes for technology and sales. The primary capital allocation priorities are returning capital to shareholders via buybacks, paying down revolver debt from the BenefitWallet acquisition, and maintaining balance sheet capacity for future deals, all while driving EBITDA margin expansion.

Asked for details on the drivers of strong member growth, the definition of a "member" as a proxy for utilization, and the company's strategy for balancing reinvestment versus profitability post-IPO.

Answer

Member growth is driven by the GLP-1 CareTrack, core platform success, and improved outreach effectiveness. A "member" is an actively billed user with strong long-term engagement rates (55% at year one, 50% at year two). The company plans to make targeted investments in the GLP-1 landscape and AI for future growth while maintaining a disciplined approach to achieving profitability.

David Roman of Goldman Sachs asked for commentary on orthopedic end-market trends, noting a potential slowdown across the industry, and sought context for the strong July results.

Answer

Chairman, President & CEO Ivan Tornos stated that the market remains healthy and above pre-COVID levels, cautioning against reading too much into a single quarter. He highlighted strong May/April and a very strong July, favorable pricing, strong ASC volumes, and continued long surgical waiting lists, concluding the market is still growing at least 4%.

David Roman inquired about the various factors affecting quarterly performance, questioning why growth remains below prior-year levels despite new product launches and asking for a timeline to see the benefits of commercial leadership changes.

Answer

President and CEO Ivan Tornos addressed the outlook, stating that Q1 growth, when adjusted for one less selling day, was near the mid-single-digit target. He projected an acceleration in the second half of 2025, driven by easier year-over-year comparisons following the 2024 ERP disruption and the full commercial launch of key new products. Tornos expressed strong confidence in achieving the full-year organic growth guidance of 3% to 5%.

David Roman of Goldman Sachs asked for an update on the gross margin trajectory, referencing prior guidance for headwinds and inquiring about the path to recovery given the current FX environment.

Answer

CFO and EVP Suketu Upadhyay explained that 2025 gross margins are expected to be in line with 2024. He detailed headwinds from inflation, capitalized costs, and FX, which are being offset by tailwinds from efficiency gains, better plant utilization, and lower E&O. He noted that H1 2025 gross margins would be similar to Q4 2024 levels, with a sequential step-up in H2. Any benefits from recent FX hedge gains would likely materialize in the 2026 P&L.

David Roman from The Goldman Sachs Group requested a deeper analysis of the reconstructive businesses, asking if U.S. Knees supply issues from the prior quarter were resolved and what drove the international strength.

Answer

CEO Ivan Tornos confirmed that the previous quarter's revision implant shortage has been resolved. He clarified that Q3 U.S. knee growth was slowed by ERP-related challenges that limited the rollout of new Persona sets, not by ongoing supply constraints. He also noted the strong, nearly 10% international growth in the quarter.

David Roman from Goldman Sachs asked about the strategic sustainability of Tandem's multi-pump platform model, given its resources and a competitive landscape where rivals focus on single platforms.

Answer

President & CEO John Sheridan affirmed the company's belief in the portfolio approach, stating the market is segmented and different products are needed to cover the entire spectrum of user preferences. He highlighted continued interest in the t:slim X2 and the versatility of Mobi. He also noted that the organization is driving internal efficiencies to make implementing features like mobile apps and sensor integrations across platforms easier, allowing them to maintain a flat R&D spend.

David Roman asked for an explanation of the factors that kept gross margin at 51%, despite the strong U.S. sales and increasing contribution from the Mobi pump.

Answer

CFO Leigh Vosseller explained that while Mobi is a growing part of the mix, it is still early in its journey to becoming fully accretive. She noted pump costs improved for both t:slim and Mobi and highlighted a clear pathway to achieving a 60% gross margin as early as 2026, driven by Mobi, pharmacy pricing, and direct OUS sales.

David Roman asked for context on the quarter's P&L performance in relation to Tandem's long-term financial targets for gross margin and adjusted EBITDA.

Answer

EVP and CFO Leigh Vosseller characterized the current period as a "transition year" due to the Mobi launch. She noted Mobi is the largest future contributor to gross margin but is a near-term headwind until it reaches scale, which she expects to begin showing benefits in 2025. She also cited pharmacy channel access as another key long-term margin driver.

David Roman from Goldman Sachs asked for a breakdown of the oxygenator business, focusing on the dynamics between underlying demand and industry capacity. He also questioned if the Neuromodulation segment's current 5% growth rate is a transitional level before a potential future acceleration.

Answer

CEO Vladimir Makatsaria explained that strong, mid-single-digit procedure growth is outpacing market supply for oxygenators, and LivaNova is gaining share while expanding its own capacity, though third-party supply is a constraint. CFO Alex Shvartsburg addressed Neuromodulation, stating the company is pleased with the first-half performance despite headwinds and views the business as a durable mid-single-digit grower, having successfully managed the generator transition.

David Roman inquired about the drivers behind the strong OUS neuromodulation performance in Q1 and its sustainability, and also sought clarification on the components of the updated EPS guidance bridge.

Answer

President of Global Epilepsy Stephanie Bolton attributed the strong OUS performance to improved commercial execution, including talent upgrades and better customer segmentation, expressing confidence in its continuation. CFO Alex Shvartsburg clarified that the positive adjustment in the EPS outlook was driven primarily by top-line revenue growth and the associated gross margin upside, supplemented by ongoing operational spending optimization.

David Roman of Goldman Sachs questioned the capital allocation strategy, asking how management weighs investment in successful core franchises like Essenz against resource-intensive pipeline projects like DTD and OSA. He also sought to confirm if the 2025 outlook implies that the core business can achieve high single-digit top-line growth with leveraged bottom-line growth, funding new initiatives while still growing overall EPS.

Answer

CEO Vladimir Makatsaria corrected the term 'moonshots,' stating that key milestones have de-risked the DTD and OSA programs. He emphasized that the #1 priority is sustained growth in the core businesses, with reinvestment to support it. He noted R&D as a percent of sales is declining, with a proportional shift towards the core. CFO Alex Shvartsburg confirmed the strategy is to grow the core businesses at above-market rates with margin expansion, which funds investment in the high-growth, healthy-margin opportunities of OSA and DTD. He affirmed the goal is to drive earnings growth ahead of the top line.

David Roman asked about LivaNova's high-level portfolio strategy, specifically the balance of R&D investment between core businesses and higher-risk programs like DTD and OSA. He also inquired about the drivers behind the implied Q4 revenue slowdown and the setup for 2025.

Answer

CEO Vladimir Makatsaria outlined a three-part strategy: maximizing the core epilepsy and cardiopulmonary businesses, setting direction for DTD and OSA pending key data, and defining a future growth portfolio. CFO Alex Shvartsburg explained the Q4 revenue slowdown is due to a difficult comparison to strong Essenz placements in Q4 2023, not a change in business fundamentals, and noted Q4 margins would be impacted by planned growth investments.

David Roman of Goldman Sachs Group, Inc. inquired about the company's preliminary thoughts on the ambulatory specialty model proposed in the CMS physician fee schedule and its potential to drive incremental demand through incentives for early detection.

Answer

CFO Daniel Wilson acknowledged awareness of the proposal, stating the team is exploring it in the context of the product roadmap and potential for additional reimbursement, pending the final rule. President and CEO Quentin Blackford added that such proposals ultimately create greater awareness of the disease state, which can serve as a lead generation opportunity for iRhythm's products.

David Roman asked for more detail on the Epic integration, specifically how it is progressing and how investors should think about its potential for demand generation and incremental volume.

Answer

CEO Quentin Blackford described the Epic partnership as 'terrific,' citing very positive feedback on workflow efficiency from early adopters. He noted that a significant number of new accounts are scheduled for integration in Q1 2025, including a key competitive conversion. While there are anecdotal signs of a volume uplift, he stated the company wants to observe trends across a broader set of accounts before factoring it into forward-looking guidance.

David Roman from Goldman Sachs asked about the potential for international expansion, particularly in the U.K. and Japan, to offset the revenue impact from the delayed MCT launch.

Answer

CEO Quentin Blackford expressed excitement for international markets, noting progress in the U.K. and early orders from new EU markets. He highlighted Japan as the most exciting opportunity, with a commercial launch expected in H1 2025. While he expects international to be an incremental contributor, growing from ~1-2% of revenue now to 8-9% over several years, he was cautious about providing specific guidance on the ramp.

David Roman of Goldman Sachs inquired about the progress of Teladoc's transition from a subscription-based model to a pay-per-visit model, asking how far along the transition is and how the company measures its success.

Answer

CEO Charles Divita explained that the transition has been ongoing for several years and has now reached a point where over 50% of virtual care revenue comes from visit-based arrangements. He noted that in mental health, this figure is around 70%, indicating that underlying visit growth will increasingly translate into revenue growth, though some headwinds from the subscription model shift remain.

David Roman asked for clarification on the significant decline in revenue per member for both the Integrated Care and BetterHelp segments, despite member growth, and questioned the strategic balance between pursuing member growth versus profitability.

Answer

CFO Mala Murthy attributed the Integrated Care decline to the onboarding of a large cohort of new members with core services, who have yet to be upsold. For BetterHelp, she cited the mix of international users and lower-priced weekly offers. CEO Chuck Divita defended the member growth strategy, stating it's crucial for the shift to visit-based fees and provides a base for upselling higher-value chronic care services, which are key to future growth.

David Roman of Goldman Sachs requested a breakdown of the key operational business dynamics for 2025 compared to 2024 for both segments and asked how management plans to achieve a sustainable direction for the BetterHelp business.

Answer

CFO Mala Murthy detailed the 2025 outlook, citing drivers for Integrated Care like international growth, the Catapult acquisition, and visit momentum, offset by a client loss and FX. For BetterHelp, she stated the focus is on stabilization through monitoring acquisition costs, driving international expansion, and improving the core platform, with a goal of modest sequential revenue improvement from Q2 onwards.

David Roman from Goldman Sachs inquired about the real-world safety and outcomes data for the EVOQUE device, given some recent publications. He also asked if returning to a low-30s operating margin is a reasonable long-term expectation for the company.

Answer

Corporate VP Daveen Chopra asserted that real-world EVOQUE outcomes are similar to or better than the TRISCEND II trial results, with more data expected at upcoming conferences. CEO Bernard Zovighian added that next-generation devices will continue to improve outcomes. CFO Scott Ullem declined to set a specific 30% margin target, instead reiterating the goal of 50-100 basis points of annual margin expansion starting in 2026.

David Roman from Goldman Sachs inquired about the real-world safety and outcomes data for the EVOQUE TMTT device, particularly concerning adverse events and the learning curve. He also asked if returning to a 30%+ operating margin is a realistic long-term goal.

Answer

Daveen Chopra, Corporate VP of TMTT, asserted that real-world EVOQUE outcomes are 'similar or better' than trial data, with more evidence forthcoming. CEO Bernard Zovighian added that EVOQUE will see continuous innovation. CFO Scott Ullem declined to set a specific 30% margin target, instead reiterating the goal of 50-100 basis points of annual margin expansion starting in 2026.

David Roman inquired about TAVR referral patterns following the EARLY TAVR trial data and the company's market development plans post-indication approval. He also asked about TMTT market segmentation between repair and replacement.

Answer

Larry Wood, Group President of TAVR, noted that physicians are still absorbing the data, which highlights the unpredictability of asymptomatic aortic stenosis. A detailed education plan will launch post-approval. CEO Bernard Zovighian and Daveen Chopra, Global Leader of TMTT, reiterated their 'toolbox' strategy, stating TEER and replacement are complementary. They expect TEER to remain the larger mitral therapy for now, while the tricuspid repair/replacement mix is still being defined by clinicians.

David Roman asked about the key drivers behind the TMTT segment's 2024 outperformance and the operational steps needed to achieve the 2025 sales guidance. He also requested clarification on the sequential deceleration from a strong Q4 into the Q1 2025 guidance, which is below the full-year growth range.

Answer

CEO Bernard Zovighian and Daveen Chopra, Global Leader of TMTT, attributed the 2024 TMTT strength to the expanding contribution of both PASCAL and EVOQUE in the U.S. and Europe. They expect this linear growth to continue in 2025. Regarding Q1 guidance, Larry Wood, Global Group President of TAVR, explained that a typical slowdown in patient screening in late December leads to a slower start in January for TAVR, which is factored into the forecast.

David Roman asked about the post-TCT activities and timeline for seeing benefits from potential positive data. He also sought confirmation on the 2025 operating margin outlook and the interplay between the NCD and NTAP for EVOQUE.

Answer

CEO Bernard Zovighian deferred TCT-related questions to the upcoming conference. Daveen Chopra, Global Leader of TMTT, explained the NTAP provides incremental payment per case, while the NCD determines which patients are covered for reimbursement, expecting a draft NCD by year-end. CFO Scott Ullem confirmed the 27-28% operating margin for 2025 is a new base off which the company plans to grow.

David Roman from Goldman Sachs asked for a detailed breakdown of the drivers behind the 44.8% revenue conversion rate and which factors are most influenceable. He also requested a benchmark for a best-in-class conversion rate and perspective on a recent ambulatory care model announcement.

Answer

CFO Vaseem Mahboob detailed the three drivers: fill rate, converting fittings to claims (the largest factor, improved by in-network status), and collections performance. He offered a potential best-in-class benchmark of 76%. President and CEO Brian Webster commented that while it's early to assess the ambulatory model's impact, Kestra is well-positioned due to its at-home patient monitoring capabilities.

David Roman from Goldman Sachs asked for a detailed breakdown of the drivers behind the 44.8% revenue conversion rate, a benchmark for a best-in-class rate, and the company's perspective on the new ambulatory specialty model.

Answer

CFO Vaseem Mahboob identified the bill rate—the ability to convert a fitting into a claim—as the single largest driver, which is improved by expanding in-network payer coverage. He provided a potential best-in-class conversion rate benchmark of 76%. CEO Brian Webster noted it was too early to quantify the impact of the ambulatory model but stated Kestra is well-positioned given its at-home patient monitoring capabilities.

David Roman of Goldman Sachs requested a more detailed breakdown of the top-line drivers within the MedSurg segment, asking to what extent the growth was attributable to new product launches versus recent commercial organization changes.

Answer

CEO Bryan Hanson explained that the growth is a combination of factors, with improved commercial execution being the primary driver. This enhanced focus is amplifying the success of both established, underpenetrated brands like V.A.C. and recent innovations like V.A.C. Peel and Place and the digitized eBowie-Dick sterilization test.

David Roman requested an analysis of the factors driving the top-line volume improvement in late 2024 and how that informed the 2025 outlook. He also asked for an update on end-market performance and competitive dynamics.

Answer

CEO Bryan Hanson attributed the recent top-line traction primarily to commercial excellence initiatives, including changes in talent, compensation, and culture. CFO Wayde McMillan confirmed the shift from price-led to volume-led growth in the second half of 2024 provides confidence for the 2025 guide. Regarding end markets, Bryan Hanson noted that the strong Q4 dental growth was due to an easy comparison and a blended Q3/Q4 result is more indicative of the market.

David Roman from Goldman Sachs sought to understand the key drivers of gross margin to establish a normalized baseline. He also asked about the strategic criteria for portfolio optimization and inquired about the relationship between mentioned capacity constraints and capital expenditure plans.

Answer

CFO Wayde McMillan explained that Q3 gross margin included a ~100 basis point onetime benefit that offset the 3M supply agreement markup and will partially reverse in Q4. He suggested averaging Q2 and Q3 margins to get a baseline just below 56%. CEO Bryan Hanson outlined portfolio assessment criteria, focusing on faster-growth markets with favorable margin profiles where Solventum has a right to win. Regarding capacity, Hanson clarified that constraints for new products like Peel and Place are demand planning issues, not capital-intensive, while P&F capacity does require significant capital investment. McMillan added that CapEx is guided to the low end of the $400M-$500M range.

David Roman asked for an analysis of the gross margin drivers to establish a normalized baseline, considering onetime items and the 3M supply agreement. He also sought clarity on the strategic parameters for portfolio assessment beyond EPS dilution, and later inquired how to reconcile commentary on capacity constraints with the updated CapEx forecast.

Answer

CFO Wayde McMillan explained that Q3 gross margin included a ~100 basis point onetime benefit that offset the 3M supply markup, and suggested averaging Q2 and Q3 margins would yield a baseline just under 56%. CEO Bryan Hanson outlined the portfolio assessment criteria: focusing investments on faster-growth markets with favorable margin profiles where Solventum has a right to win. Regarding capacity, Hanson clarified that constraints for new products like Peel and Place are related to demand planning, not heavy capital, while P&F capacity does require significant capital investment. McMillan added that CapEx is being directed toward the lower end of the prior range but will support both separation activities and focused growth driver investments.

David Roman asked for an update on the pricing environment and the rollout status of the Pangea plating system.

Answer

CFO Preston Wells described pricing as a well-exercised muscle, noting positive trends in MedSurg and Neurotechnology and less price erosion in Ortho, which is a key lever to offset tariffs. VP Jason Beach and CEO Kevin Lobo confirmed Pangea is seeing excellent momentum and contributing materially, with an ongoing rollout in the U.S. and international launches planned for Australia, Canada, and Japan.

David Roman requested an update on the performance and integration of the seven acquisitions completed in 2024. He also asked about the market dynamics and adoption pace for the new Mako Shoulder robotic application.

Answer

CEO Kevin Lobo reported that all 2024 acquisitions are performing at or above their deal models and integrations are proceeding smoothly. He added that Mako Shoulder has received exciting early feedback, with 2025 being a limited launch year to refine training before a wider rollout in 2026.

David Roman asked about the potential for international expansion across the portfolio and whether Mako's new applications in shoulder and spine could drive market share gains similar to its success in hips and knees.

Answer

CEO Kevin Lobo highlighted the MedSurg portfolio as the largest opportunity for international growth, calling it a multi-year tailwind. Regarding Mako, he expressed extreme excitement for its potential in shoulder, comparing it to the knee application. For spine, he believes Mako will make Stryker highly competitive but noted it may not be as transformational, as the robotic offering is less differentiated in that specific market.

David Roman asked about BD's process for gathering market and competitive intelligence, questioning whether the company has the right people and validation processes in place, given that recent performance has been impacted by unforeseen end-market dynamics.

Answer

Chairman, CEO and President Thomas Polen explained that intelligence gathering is led by business-level teams close to the markets, supported by a central strategy group and external consultants. While acknowledging recent forecasting challenges in research funding, he highlighted BD's strong track record of being ahead of the curve on other macro issues, such as China's VBP, inflation, and supply chain disruptions. He affirmed that while they always strive to improve, their processes have proven effective in many areas.

David Roman asked for an update on end-market performance, noting that the Pharmaceutical Systems and Biosciences businesses appeared to have deteriorated from their Q4 2024 exit rates, and questioned the path back to consistent performance.

Answer

Chairman, CEO and President Tom Polen clarified that the Biosciences slowdown was expected due to challenging comps from a year ago before the research spending downturn fully hit BD. He stated the outlook remains cautious. For Pharmaceutical Systems, he noted ongoing destocking in vaccine categories but expects a recovery in the second half of the year. He affirmed BD's strong position, with an 80% win rate on new biologic drugs and over 50 GLP-1 biosimilar contracts.

David Roman asked for a deeper dive into the P&L construction for fiscal 2025 and beyond, considering discrete items like gross margin normalization, M&A accretion, tax headwinds, and the recent increase in operating expense growth.

Answer

EVP and CFO Chris DelOrefice explained that the company is excited about the P&L shape for FY25. He highlighted that the expected 100 basis points of operating margin expansion will be driven primarily by gross margin improvement from the BD Excellence program. This allows for reinvestment in growth drivers like selling and R&D, creating what he described as a very healthy P&L for the long term.