Joseph Conway

Joseph Conway from Needham & Company inquired about the growth rates of Enovis's Bone Stim and laser products, specifically how their double-digit growth compares to respective market growth rates. He also asked about the anticipated impact of the Optimys launch on hip growth and whether it presents an acceleration opportunity to maintain or exceed the current above-market growth rate.

Answer

Ben Berry (CFO) stated that Enovis is slightly ahead of market in both Bone Stim and laser categories, attributing Bone Stim's strength to Manafuse and lasers to strong performance and innovation. Kyle Rose (VP of Investor Relations) highlighted the continued runway for Nebula and OrthoDrive, with Optimys's RM Cup component launching in the U.S. later in the year, reinforcing the long-term hip pipeline.

Joseph Conway asked about the growth rates of Bone Stim and laser products, specifically how their double-digit growth compares to their respective market growth rates. He also inquired about the Optimys launch's potential impact on hip growth, asking if it would sustain or accelerate Enovis' above-market growth rate in hips.

Answer

Ben Berry, Chief Financial Officer, stated that Bone Stim and laser products are growing slightly ahead of their respective markets, with Manafuse providing a more comprehensive Bone Stim portfolio and continued innovation planned for lasers. Kyle Rose, VP of Investor Relations, highlighted the long runway for Nebula and OrthoDrive in hips, with Optimys (RM Cup) coming to the U.S. market later in the year, reinforcing the strength of the longer-term hip pipeline.

Joseph Conway, on behalf of Needham & Company, asked for clarification on the drivers of the revenue guidance increase and the nature of a small acquisition in the P&R segment. He also questioned why the strong gross margin expansion did not flow through to a higher adjusted EBITDA margin in the quarter.

Answer

CFO Ben Berry clarified that the revenue guidance raise was driven by both a better currency outlook and a 25-basis-point increase in the organic growth forecast. He described the P&R acquisition as an immaterial bolt-on. Regarding margins, Berry explained that the gross margin benefit was offset by the phasing of operating expenses and increased R&D investments during Q2, but the company remains on track for its full-year expectations.

Joseph Conway inquired about Inogen's 2026 adjusted EBITDA guidance, specifically whether the company expects to be EBITDA positive in every quarter, considering historical seasonal variations and higher Q4 expenses.

Answer

CFO Mike Bourque explained that Q2 and Q3 are historically the strongest quarters and have been adjusted EBITDA positive in the last two years, while Q1 and Q4 are more challenging. He confirmed a commitment to improving profitability and generating positive adjusted EBITDA for the full year 2026, but noted additional R&D investments in 2026 could impact quarterly EBITDA, suggesting historical quarterly cadences would be relatively consistent.

Joseph Conway asked about the revenue cadence for Simeox in 2025, specifically if the $6 million international revenue was consistent or saw a step-up, and the international growth expectations for Simeox in 2026. He also inquired about the company's quarterly Adjusted EBITDA targets for 2026, given the full-year guidance for improvement.

Answer

CEO Kevin Smith explained that Simeox revenue saw steady growth in 2025, including a one-time Eastern European tender in Q1/Q2, and was primarily cash-pay international sales, reinforcing confidence in its therapeutic benefit. CFO Mike Bourque stated that Q2 and Q3 are historically the strongest and Adjusted EBITDA positive quarters, while Q1 and Q4 are more challenging. He confirmed commitment to improving profitability and generating positive Adjusted EBITDA for 2026, noting that increased R&D investments will impact quarterly results, but the overall cadence should be consistent with historical patterns.

Joseph Conway from Needham & Company asked for details on the Simeox commercial launch pathway, including clinical data plans, KOL engagement, and the private payer reimbursement strategy. He also inquired about recent prescriber sales force referral trends and any changes to its size.

Answer

CEO Kevin Smith explained the Simeox launch strategy focuses on maximizing reimbursement rather than speed. This involves engaging with KOLs and CMS to determine necessary clinical data, leveraging existing European data initially. For private payers, the process will involve submitting prescriptions and managing the appeals process. Smith also clarified that the direct-to-consumer (DTC) team was reduced in 2024, affecting H1 2025 comparisons, while the prescriber sales force was brought in-house and made smaller after ending a third-party contract.

Joseph Conway asked about the shift in 2025 where minimally invasive revenue declined while non-invasive revenue doubled, questioning if this was due to new product launches, an industry shift, or changes in clinic types. He also inquired about the increase in operating countries, the direct vs. distributor sales strategy, and its potential impact on gross margins in 2026.

Answer

Moshe Mizrahy, CEO, explained that higher-cost minimally invasive procedures are more affected in a soft market, leading consumers to opt for lower-priced non-invasive treatments. He noted that despite adding 4,500 systems, procedure numbers didn't significantly grow. Mr. Mizrahy also discussed the long-term impact of GLP-1 drugs, which could increase demand for skin tightening. Regarding international expansion, he clarified that new countries are often smaller markets or extensions of existing subsidiaries, with Argentina and Thailand converted to direct subsidiaries. He emphasized that 80% of sales are direct, and the focus remains on increasing productivity in major markets.

Joseph Conway asked about the decline in minimally invasive revenue versus the strong growth in non-invasive treatments in 2025, exploring whether this was due to new products, industry shifts, or clinic types. He also questioned the increase in operating countries, new direct subsidiaries, and the emphasis on direct versus distributor sales.

Answer

Moshe Mizrahy, InMode CEO, explained that minimally invasive procedures are higher cost, while non-invasive treatments (like hair removal) are lower-priced and more accessible, attracting consumers with limited aesthetic budgets. He noted that procedure numbers didn't significantly grow despite more systems and mentioned the impact of GLP-1 drugs potentially leading to increased demand for skin tightening. Regarding international expansion, Mr. Mizrahy clarified that new countries often represent small additions or bases from existing subsidiaries, and that Argentina and Thailand were converted from distributors due to performance issues, with 80% of revenue still coming from direct sales.

Joseph Conway, on for Mike Matson, inquired about the impact of recent interest rate cuts on equipment leasing and whether multiple cuts would be needed to alleviate financing issues. He also asked about the path to restoring gross margins to the mid-80s.

Answer

CEO Moshe Mizrahy explained that general rate cuts have not yet lowered the high interest rates on lease packages for doctors. On gross margins, Mizrahy stated that returning to the mid-80s (85-86%) is unlikely in the near term, including 2025, citing rising transportation costs and manufacturing complexities from the war in Israel. He affirmed that a range of 80% to 82% is a more realistic target.

Joseph Conway of Needham & Company, on for Mike Matson, asked if the strong On-X growth included any one-time stocking orders and requested more details on the ARTISAN trial for Arecibo, including follow-up time and surgeon training requirements.

Answer

CEO J. Patrick Mackin clarified that On-X sales in the U.S. are based on consignment and actual usage, meaning the strong growth reflects implants, not stocking. He explained that the Arecibo device used in the ARTISAN trial is designed for ease of use, making the training lift for experienced surgeons minimal. This simplicity is expected to allow the trial to ramp up quickly.

Joseph Conway of Needham & Company requested a summary of the key growth levers for the pain management franchise and asked how R&D spending is expected to trend with LEAPS enrollment complete but new trials beginning.

Answer

President and CEO Michael Carrel highlighted innovation, particularly the CryoSphere MAX's reduced freeze time, as the number one driver for pain management growth. CFO Angela Wirick added that U.S. volume growth exceeded 30%. Regarding R&D, Wirick forecast that spending growth would be in line with or slightly above top-line growth, fueled by the new BOX No AF trial and PFA development.

Joseph Conway, on for Mike Matson, asked about the strong VICTORI data in colorectal cancer (CRC), including marketing plans and competitive differentiation, and also inquired about the company's expectations for achieving ADLT status.

Answer

Executive Christopher Hall clarified that the CRC data marks the beginning of their fourth indication journey and is not yet part of the exclusive Tempus agreement. Executive Richard Chen highlighted the data's strength, noting 87% landmark sensitivity and 100% detection of recurrences prior to imaging. Regarding ADLT status, Hall explained it's a post-reimbursement goal and that the company's economic model is designed to be successful even with standard reimbursement, projecting 60% gross margins at current rates.

Joseph Conway, on for Mike Matson, asked if a specific indication is driving NeXT Personal volume and which clinical datasets are resonating most with physicians. He also inquired about the criteria for taking on new enterprise sequencing contracts.

Answer

CEO Christopher Hall noted that while volume is strong across all three focus areas, IO therapy monitoring is a significant pan-cancer driver. He highlighted the TRACERx (lung) and Royal Marsden (breast) data as particularly impactful for demonstrating the test's ability to detect cancer months ahead of imaging. CFO Aaron Tachibana added that any new enterprise partnerships must align with the company's core competencies and not distract from the primary strategic focus on MRD.

Joseph Conway, on for Mike Matson, asked for early feedback on the upcoming gantry launch and clarification on the end-of-life strategy for older units. He also questioned if the strong Skeletal Health results represented a full catch-up on backorders.

Answer

CEO Stephen MacMillan clarified the end-of-life strategy involves upgrading customers to the current, best-in-class 3Dimensions gantries, as the new Envision launch is a fiscal 2026 event. COO Essex Mitchell added that feedback on Envision from its RSNA debut has been great. CFO Karleen Oberton confirmed the Q2 quarter was the primary catch-up period for Skeletal and expects trends to normalize going forward.

Joseph Conway from Needham & Company, on for Mike Matson, requested an update on the 'Playbook' enabling technology software and the new Fusion implant system. He also asked if 2025 is expected to be an inflection point for 7D system placements.

Answer

Executive David Bailey reported that the Playbook software was recently launched internally and is expected to drive core business revenue in 2025 before becoming a stand-alone contributor. The new Fusion system is on track for potential use by late 2025 but is not in the 2025 forecast. Regarding 7D, Bailey stated it is already a significant driver, having accelerated scoliosis growth in late 2024. He expects consistent 7D placements in 2025 will create a compounding revenue effect.

Joseph Conway from Needham & Company asked for the organic revenue growth in the quarter, the outlook for the upcoming flu/RSV season, the status of hospital staffing, and for more details on the 7D system placements and surgeon feedback.

Answer

Executive David Bailey provided the components to calculate organic growth, noting the Boston O&P acquisition added about $25 million annually, with a portion recognized in Q3. He stated the company's guidance assumes a flu/RSV impact similar to last year, which hospitals managed effectively, and confirmed hospital staffing is now normalized. Regarding the 7D system, Bailey reported an installed base of around 20 units, extremely positive surgeon feedback, and a large sales funnel, highlighting that placements are key to securing long-term scoliosis fusion revenue in major accounts.

Representing Mike Matson, Joseph Conway asked how the 2028 target of serving 1 million patients aligns with revenue growth assumptions, and whether the launch of Neo Comprehensive with HRD is an inflection point or an incremental addition.

Answer

CFO Jeff Sherman clarified that the 1 million patient goal is a macro target including Pharma and shouldn't be used to model clinical volume directly; growth will remain a mix of volume and AUP. CCO Warren Stone explained that adding HRD addresses a growing need as guidelines evolve for ovarian, prostate, and breast cancer, fulfilling a key request from physicians.

Joseph Conway asked for more detail on the drivers behind the raised guidance for the Vascular Interventions portfolio and the expected timeline to achieve target gross margins for these new products.

Answer

CFO Timothy Arens explained that the guidance increase for SurVeil, Pounce, and Sublime products to at least $15.5 million is driven by strong existing product traction, with a conservative view on newly launched products. Executive Gary Maharaj added that Pounce arterial sales alone now exceed $1 million per quarter. Regarding margins, Arens noted they are already improving due to scale and efficiency, raising the full-year product gross margin guidance to the mid-to-high 50s. He suggested reaching typical med-tech margins could occur within a couple of years if growth continues.

Joseph Conway from Needham & Company asked for more detail on the raised guidance for SurVeil, Pounce, and Sublime products to at least $15.5 million, questioning the drivers of the increase and the impact of new product launches. He also inquired about the timeline to achieve higher medical device gross margins and potential future capacity increases.

Answer

Executive Timothy Arens confirmed the guidance is 'at least $15.5 million' and stated that while the new Pounce LP and Venous launches contribute, they are not the sole driver of the increase. He noted that product-level revenue details would not be provided at this stage. Regarding gross margins, he highlighted the recent improvement to nearly 61% and the raised guidance to the 'mid- to high 50s' range, driven by scale and efficiency, but did not provide a specific timeline for reaching higher med-tech margins. Executive Gary Maharaj added that Pounce arterial sales alone now exceed $1 million per quarter and that the company's infrastructure was built to scale, with volume being the key to absorbing overhead.