JP Wollam

JP Wollam asked about the reception to the consumables price increase implemented in Q3, whether pricing might be a future lever, and what differentiates utilization between the company's best and worst partners. He also inquired about ongoing OpEx management, specifically potential offsets to new investments through centralizing international costs.

Answer

CFO Mike Monahan confirmed a 5% price increase on consumables at the beginning of Q3, which was successful with little pushback, and the sales and marketing team continues to evaluate pricing. CEO Pedro Malha noted that providers who understand how to prescribe boosters use roughly three times more, highlighting the importance of marketing and education. Mike Monahan also discussed creating shared service centers to manage the global business effectively and gain cost efficiencies, expecting this process to be finalized by the end of the year. He stated that G&A is expected to be stable to slightly up due to R&D reinvestment, but there's long-term opportunity for efficiencies and operating leverage as the business returns to growth.

JP Wollam inquired about OpEx management, specifically potential offsets to upcoming investments, such as centralizing international costs (e.g., accounting, finance), and future OpEx efficiencies.

Answer

Mike Monahan, CFO, mentioned ongoing creation of shared service centers and investments in back-end system infrastructure to manage global business effectively and reduce costs, expected to be finalized by year-end. He noted G&A is guided stable to slightly up, with reinvestment into R&D. He sees long-term opportunities for OpEx efficiencies and significant leverage as the company returns to growth, allowing more gross profit to drop to adjusted EBITDA.

JP Wollam inquired about the change in G&A expectations, noting a previous anticipation of leverage that now aligns with revenue growth, and asked what factors led to this shift. He also followed up on tariffs, specifically whether the 2026 guidance includes any tightening of advertising and promotional (A&P) expenses that could be re-invested for top-line upside if tariffs were removed.

Answer

EVP and CFO Sean Sullivan explained that normalizing for PTO and one-time ERP expenses in 2024 and 2025, OpEx growth has been less than sales growth, and he expects 2026 OpEx growth to be in line with sales, indicating gradual operating leverage. Regarding tariffs, Sullivan stated that the company is not pulling back on A&P to support long-term growth, maintaining business as usual despite the tariff landscape, and has confidence in the current guidance.