Jeff Johnson

Jeff Johnson sought clarification on SG&A as a percentage of revenue (expecting an increase this year then growth below sales) and the R&D ramp (towards 5% this year, eventually 6%). He then asked if Dentsply Sirona would consider lowering price points for products like imaging, IOS, and 3D printing to compete with improved lower-priced alternatives, or if the focus remains solely on driving innovation.

Answer

President and CEO Dan Scavilla clarified that SG&A will see some influx but not a large pop, with a goal to grow expenses at half the rate of sales. R&D is expected to be around 5% in 2026, with 6% in sight if the plan is successful. Regarding pricing, Mr. Scavilla stated that investments will drive innovation and allow for future pricing flexibility, emphasizing Dentsply Sirona's premium 'Mercedes' positioning and focus on differentiating inputs through innovation rather than competing on lower price points.

Jeff Johnson from Baird sought clarification on Dentsply Sirona's SG&A as a percentage of revenue, asking if it would be up in 2026 but grow below sales going forward, and if the R&D ramp would eventually reach the 6% range. He then asked about the company's strategy regarding product pricing, specifically if there's a consideration to lower price points to be more competitive or if the focus remains on investing in innovation to drive differentiation.

Answer

President and CEO Dan Scavilla clarified that SG&A might have some influx but shouldn't be a large pop, with a goal to grow expenses at half the rate of sales growth. He confirmed R&D is expected to be around 5% in 2026, with 6% in sights if the plan is successful. Mr. Scavilla emphasized that Dentsply Sirona will maintain its premium 'Mercedes' positioning, focusing on innovation to offer differentiating and meaningful inputs rather than lowering price points to compete with lower-priced alternatives.

Jeff Johnson asked about the consistent 5-7% growth range for the U.S. hip and knee business in 2025, after adjustments, and whether ARVIS could accelerate this growth or if its multi-pronged strategy would primarily focus on placements and implant commitments. He also questioned the iterative improvement of free cash flow conversion towards the 70-80% target, considering heavy launch years and initial ARVIS strategy.

Answer

Damien McDonald, Chief Executive Officer, highlighted the excitement for hip and knee expansion with Nebula and OrthoDrive, noting 60% of Nebula placements were competitive conversions, and expected ARVIS to lift the entire U.S. group. Ben Berry, Chief Financial Officer, confirmed expectations for continued incremental improvements in free cash flow conversion, absorbing ARVIS investments due to its capital-light nature, and noted 2026 as the final substantial year of Lima integration investments.

Jeff Johnson from Baird asked about the expected growth trajectory for Enovis's U.S. hip and knee business in 2026, specifically if ARVIS could push it above the consistent 5-7% range seen in 2025. He also questioned the iterative improvement path for free cash flow conversion towards the 70-80% target, considering heavy launch years like ARVIS.

Answer

Damien McDonald (CEO) highlighted the potential for hip and knee growth from Nebula and OrthoDrive, with ARVIS expected to further boost the U.S. group. Ben Berry (CFO) affirmed expectations for continuous, accelerating improvements in free cash flow conversion, noting 2026 as the final substantial year for Lima integration investments and emphasizing ARVIS's capital-light nature.

Jeff Johnson asked for confirmation that Alcon has not previously had a monofocal plus lens, the mix of monofocal versus monofocal plus in the U.S. and international markets, and if there's a pricing premium for monofocal plus. He also asked Tim Stonesifer about the EPS gating, specifically if it would be relatively flat despite second-half profitability improvements, given potential first-half weighted currency tailwinds.

Answer

David Endicott, CEO, confirmed Alcon has not had a monofocal plus lens and that it carries a slight price premium. He explained that in the U.S., its impact has been mainly in the toric business, where Alcon lost share to monofocal plus lenses, representing an opportunity. Internationally, monofocal plus carved out a meaningful space due to price point challenges. Tim Stonesifer, CFO, clarified that EPS growth is in constant currency. He detailed that gross margin will be lighter in H1 due to tariffs, SG&A will have a similar profile with a heavy Q2 M&S spend, and 60-70% of the announced savings will be H2 loaded, all contributing to higher H2 profitability.

Jeff Johnson asked for confirmation that TRU Plus is Alcon's first Monofocal plus lens, the mix of Monofocal vs. Monofocal plus in the U.S. and international markets, and if there's a pricing premium. He also questioned the EPS gating, specifically if it would be relatively flat despite higher H2 profitability due to H1 currency tailwinds.

Answer

CEO David Endicott confirmed TRU Plus is a new Monofocal plus offering, noting its impact has been significant in the U.S. Toric space and meaningful internationally, with a modest price premium. CFO Tim Stonesifer clarified that EPS growth is constant currency, and while H2 profitability will be higher due to savings, H1 gross margin will be lighter due to tariffs, and Q2 will have heavy M&S spend.

Jeff Johnson from Robert W. Baird & Co. asked about the phasing of VBP tailwinds in China for the implantables business and whether the flat Q1 growth represented a trough. He also inquired about the pricing strategy for PanOptix Pro versus the original PanOptix.

Answer

CEO David Endicott attributed the flat implantables growth to the soft U.S. market and expects the VBP tailwind to last until mid-2026. CFO Tim Stonesifer added that the VBP comp normalizes in Q2. Regarding pricing, Mr. Endicott declined to share specifics but acknowledged the strategic flexibility offered by having two distinct premium products.

Jeff Johnson asked about the linearity of the $125 million run rate operating income improvement plan for 2026 and how much of that benefit could flow through to 2027.

Answer

Ronald N. South, Senior Vice President and CFO, explained that the initiatives are in early stages, so earnings growth will be more heavily weighted to the second half of 2026 due to investments in the first half. He noted that the impact on 2027 is yet to be determined.

Jeff Johnson asked about the expected cadence of the $125 million run rate operating income improvement plan for 2026, specifically whether it would build sequentially and how much of it might flow through to the bottom line in 2027.

Answer

Ronald N. South, Senior Vice President and CFO, explained that the benefits from these initiatives would not be linear and would be more heavily weighted towards the second half of 2026 due to investments in the first half. He deferred on providing specific details for 2027.

Jeff Johnson asked about the phasing of the $200 million operating income cost savings, specifically if it's a net number inclusive of reinvestments and how it might be split over the next three years. He also inquired whether a similar remeasurement gain should be expected in the model for next year.

Answer

Ron South, Senior Vice President and Chief Financial Officer, stated that the $200 million is a multi-year, net operating income improvement, with phasing details for 2026 to be provided with future guidance. He noted that remeasurement gains have been a regular part of the business but did not commit to a significant one for 2026, promising clarity in future guidance.

Jeff Johnson asked about the phasing of the $200 million operating income cost savings, specifically if it's a net number and how it will be distributed over the next three years, and whether a similar remeasurement gain is expected in 2026.

Answer

Ron South, Senior Vice President and Chief Financial Officer, confirmed the $200 million is a multi-year, net operating income improvement, but the specific phasing for 2026 is still being assessed. Regarding remeasurement gains, he noted they have been a regular part of the business but no significant ones are expected in the near future, with clarity to be provided in the 2026 guidance.

Jeff Johnson asked for clarification on pharmacy pricing for tubed pumps, specifically if $450 per month is a reasonable modeling number, and whether current users transitioning to the pharmacy channel would receive the same higher supply price.

Answer

EVP and CFO Leigh Vosseller advised modeling approximately $350 per month per customer as a starting point for pharmacy reimbursement, noting that this is a significant benefit compared to current DME pricing. She clarified that going forward, the business will be structured with consistent pricing across all customers, regardless of whether they are new or existing pump users, effectively resetting the pricing model.

Jeff Johnson asked for guidance on modeling PayGo pharmacy pricing, specifically if $450 per month is a reasonable figure, and whether current users shifting to the pharmacy channel would receive the same higher supply price, which ostensibly includes pump amortization.

Answer

EVP and CFO Leigh Vosseller advised modeling PayGo at approximately $350 per month per customer initially, noting this is a starting point due to varying contract terms, preferred/non-preferred access, and co-pay assistance. She confirmed that pricing would be consistent across all customers (new or existing) once they transition to the pharmacy channel, effectively resetting the business structure to be agnostic to prior pump acquisition.

Jeff Johnson asked about the most underappreciated aspects of the Insulet story from an investor perspective, considering the company's performance over the past year.

Answer

Ashley McEvoy, President and CEO, highlighted four key areas: Insulet's technology leadership, growing commercial prowess, manufacturing at scale, and financial strength. She elaborated on the company's innovation pipeline, including Omnipod 5 enhancements, Omnipod 6, and a fully closed-loop system for Type 2 diabetes. She also emphasized the largest sales force in the industry, unparalleled access and affordability, and robust manufacturing capabilities, alongside a strong financial model with recurring revenue, expanding margins, and positive cash flow.

Jeff Johnson asked Ashley McEvoy about the most underappreciated aspects of Insulet's story from an investor perspective, given her tenure as CEO.

Answer

Ashley McEvoy (President and CEO) highlighted four key areas: Insulet's technology leadership (Omnipod 5, pipeline including Omnipod 6 and fully closed loop), growing commercial prowess (largest sales force, strong brand loyalty, unparalleled access and affordability), manufacturing at scale (Malaysia already margin accretive, Costa Rica development started), and financial strength (recurring revenue, 70% gross margin, expanding operating margin, cash flow positive). Flavia Pease (CFO) and Eric Benjamin (COO) also contributed to the discussion on financial strength and R&D investments.

Jeff Johnson asked for Insulet's early thoughts on how it plans to protect and extend its competitive moat in the patch pump market, especially with potential two-piece patch pump entrants expected in the next 18-24 months.

Answer

Ashley McEvoy, President and CEO, stated the primary focus is expanding the market by converting MDI users. She highlighted Omnipod 5's differentiated technology, strong competitive sourcing in Q3, frictionless customer experience, pipeline investments (like phone control and next-generation products), and a diversified, resilient supply chain as key elements of their competitive advantage.

Jeff Johnson asked about Insulet's strategy to protect and extend its competitive moat in the patch pump market, particularly in anticipation of potential two-piece patch market entrants over the next 18-24 months.

Answer

Ashley McEvoy (President and CEO) emphasized expanding the market by transitioning MDI users to AID, highlighting Omnipod 5's differentiated technology, strong competitive sourcing in Q3, a frictionless customer experience, pipeline investments (e.g., phone control adoption from 45% to 55%), and continuous capacity investments for a resilient supply chain.

Jeff Johnson asked for clarification on recent sales rep hiring, specifically how much of the activity was for backfilling existing positions versus expanding into new territories over the last couple of months. Jeff Johnson also sought clarification on a previously discussed $10 million-$12 million in additional stocking revenue expected in 2026, mostly in supplies, and how this would compare to total stocking in 2025, following the $1 million pull-forward from Q1 to Q4 2025.

Answer

CEO Sean Saint declined to comment on specific hiring numbers but acknowledged that backfilling for turnover (due to performance or other job offers) is an ongoing process in any sales organization. CFO Stephen Feider stated that he had not previously communicated a specific number for 2026 stocking dynamics and that the $10 million-$12 million figure was not directionally accurate, declining to comment further on it.

Jeff Johnson asked for clarification on Beta Bionics' recent sales rep hiring, specifically how much of it was for backfilling existing positions versus expanding into new territories over the last couple of months. He also sought to confirm if an estimated $10 million-$12 million in additional stocking revenue for 2026, mostly in supplies, was still an accurate component of the revenue guidance and how it compared to 2025 stocking.

Answer

Sean Saint, CEO, stated that the company is always backfilling positions due to natural turnover but declined to comment on specific recent hiring numbers for expansion. Stephen Feider, CFO, clarified that he had not communicated any specific stocking dynamic numbers for 2026, and the $10 million-$12 million figure was not directionally accurate.

Jeff Johnson asked about the strengthening U.S. sensor uptake trends in Q4 2025 and Q1 2026, inquiring if this was due to recovery from mid-year sensor deployment issues or continued Type 2/AID uptake, and the stability of the Type 1 and IIT2 user base amidst Libre 3's U.S. launch.

Answer

Jereme Sylvain, Chief Financial Officer, attributed improved sell-through to successful efforts in addressing sensor deployment issues (leading to lower warranty and complaint rates), the launch of the 15-Day product in DME in Q4, and increased physician engagement regarding changing coverage. He confirmed that user base retention has remained stable, emphasizing Dexcom's focus on providing an excellent product experience.

Jeff Johnson from Baird asked for more details on the strengthening U.S. sensor uptake trends observed in Q4 2025 and continuing into Q1 2026, inquiring if this was due to recovery from mid-year sensor deployment issues or continued strength in Type 2 AID uptake, and the stability of the Type 1 and IIT2 user base amidst Libre 3's U.S. launch.

Answer

Jereme Sylvain, CFO of Dexcom, attributed the improved sell-through trends to work done on sensor deployment, leading to reduced warranty and complaint rates, the launch of the 15-day product, and increased physician engagement due to changing coverage for non-insulin users. He confirmed the user base's retention and utilization have remained stable, despite competitive product launches, emphasizing Dexcom's product quality and accuracy.

Jeff Johnson asked about the drivers behind the significant improvement in Align Technology's adult business, which saw 8% growth, the best since 2021. He questioned if it was due to NoAA, HFD tailwinds, or ClinCheck Live, and also sought commentary on the North American retail (non-DSO) business performance.

Answer

President and CEO Joseph Hogan attributed adult business growth to DSOs, financial credit platforms like HFD, a broad product portfolio, and the strategy of scanning every patient for digital visualization. He described the North American retail business as having achieved 'more stability' due to team focus and a broader portfolio, rather than improved economic conditions. CFO John Morici clarified that North America's overall improvement was due to less negative retail performance combined with DSO growth.

Jeff Johnson asked about the significant 8% growth in Align Technology's adult business, the best since 2021, and the contributing factors such as NoAA, HFD tailwinds, and ClinCheck Live. He also sought clarification on the performance of the North American retail (non-DSO) business, which showed improvement.

Answer

President and CEO Joseph Hogan attributed the adult business growth to DSOs (both GP and OSO channels), financial credit options, a broad product portfolio, and the practice of scanning every patient for digital visualization. Regarding North American retail, Joseph Hogan described it as achieving 'more stability' due to focused team execution and a broader portfolio, with DSOs also contributing significantly. CFO John Morici added that North America improved due to less negative retail performance combined with DSO growth.

Jeff Johnson asked for more details on the softer capital environment observed in Europe during the quarter. He also inquired about the impact of MDR (Medical Device Regulation) challenges in Europe on the MedSurg business and whether new proposals to simplify MDR could accelerate product approvals there.

Answer

VP of Finance and Head of Investor Relations Jason Beach noted that capital businesses experience quarter-to-quarter fluctuations but expressed confidence in a healthy order book for Europe in 2026. CFO Preston Wells welcomed the proposed changes to EUMDR, acknowledging it has stunted innovation and delayed patient access, expecting it to accelerate product launches across the portfolio, particularly for implants like Insignia and Pangea.

Jeff Johnson asked for more details on the softer capital environment observed in Europe during Q4 2025. He also inquired if EU MDR challenges impacted Stryker's MedSurg business in Europe and if new proposals to simplify EU MDR could accelerate product approvals there.

Answer

Preston Wells, CFO, Stryker, stated that Europe has 'woken up' to the issues with EU MDR stunting innovation, and Stryker welcomes proposed changes that could accelerate product launches across its entire portfolio, particularly for implants. Jason Beach, VP of Finance and Head of Investor Relations, Stryker, noted that capital business in Europe experiences normal quarter-to-quarter fluctuations but the order book for 2026 is healthy.

Jeff Johnson inquired about the performance of the clariti product line, its current annualized revenue, and the potential floor for its decline. He also asked if MyDay gross margins are expected to reach clariti levels within the next one to two years.

Answer

President and CEO Al White stated that clariti was down a couple of percent this quarter, approaching $400 million for the year, and discussed repositioning efforts in Asia-Pac. EVP of CFO and Treasurer Brian Andrews noted that daily silicone hydrogel lens gross margins are currently below CooperVision's overall gross margins, expecting continued pressure but anticipating operating margin expansion and earnings growth through leverage.

Questioned the feasibility of the back-half guidance, which implies significant year-over-year EPS growth, and asked for the key drivers behind this expected ramp-up. He also requested factual details on the operational overlap between Patterson's dental and veterinary businesses in light of the strategic alternatives review.

Answer

The expected back-half EPS growth is attributed to lapping the significant negative impact of the Change Healthcare disruption from the prior year's Q4. Additional tailwinds include lower year-over-year interest expense and a reduced share count. Regarding the operational overlap between the dental and vet businesses, it's described as a 'mixed bag,' with some shared distribution and service centers, but also many facilities that are specific to each segment.

Sought clarification on the ongoing Change Healthcare impact, asking if it's due to lower monetization on new platforms or continued disruption to consumable orders. Followed up by asking if any customers were permanently lost and requested quantification of the separate impacts from Change Healthcare and the prior-year UPS issue on consumables.

Answer

The ongoing impact is primarily due to the new claims processing platform having a slightly lower revenue per customer than Change. The disruption to consumable orders is viewed as a temporary timing issue. No customers were permanently lost, though a small number found alternative claims processing solutions not integrated with Patterson's software. The UPS issue was quantified as less than a 1-point impact, with the Change issue being larger.