Kallum Titchmarsh

Callum Titchmarsh asked about Tempus AI's strategic positioning in the evolving AI ecosystem, particularly how its proprietary data and distribution protect its data business from traditional AI players. He also inquired about the reasons large pharma clients continue to engage with Tempus's Insights platform and sought feedback on customer success stories demonstrating value.

Answer

CEO Eric Lefkofsky emphasized Tempus's unique advantage in having both proprietary, multimodal data (450+ petabytes from diagnostics) for AI training and extensive distribution channels (5,500+ hospitals, 8,500+ oncologists) for delivering insights. He highlighted the difficulty of replicating Tempus's data infrastructure and the consistent value demonstrated to clients, leading to 126% net revenue retention and accelerated data business growth.

Kallum Titchmarsh with Morgan Stanley inquired about Tempus AI's strategic positioning in the evolving AI healthcare ecosystem, specifically how its proprietary data protects its market share against traditional AI players. He also asked why large pharma clients continue to engage with the Insights business and sought examples of customer success stories demonstrating value from Tempus's offerings.

Answer

Eric Lefkofsky, CEO of Tempus AI, emphasized the company's unique advantage in having both proprietary data (450+ petabytes of connected multimodal data) for training AI models and proprietary distribution channels (5,500+ hospitals, 8,500+ oncologists) for delivering insights. He highlighted the difficulty of replicating Tempus's 10-year effort in building data pipes, harmonizing data, and developing technology. Lefkofsky noted the 126% net revenue retention and accelerating growth in the data business as proof points, attributing client loyalty to Tempus's ability to help them make more intelligent asset decisions, refine discovery, design trials, and accelerate drug approval.

Kallum Titchmarsh inquired about the underlying growth and demand dynamics for pen needles and syringes, the impact of U.S. customer inventory issues and store closures, and the expected revenue cadence for the remainder of the fiscal year.

Answer

CEO Devdatt Kurdikar explained that difficult year-over-year comparisons were driven by prior-year ERP go-lives and the timing of price increases. He noted that the impact from a retail partner's store closures has been prudently factored into guidance and is considered transitory. CFO Jake Elguicze added that the second half of the year is expected to be stronger, with low-single-digit constant currency revenue growth anticipated for Q3.

Kallum Titchmarsh inquired about the expected performance of Embecta's three main product categories (pen needles, syringes, safety products) for fiscal 2025, given the lumpiness caused by prior ERP system implementations. He also asked for an update on the GLP-1 pen needle opportunity, specifically the progress in Germany and the outlook for expansion into other markets.

Answer

CEO Devdatt Kurdikar explained that Q1 performance was impacted by a Q4 2024 order pull-forward ahead of a potential port strike and the timing of ERP implementations. He stated that underlying market trends for each product category remain unchanged. CFO Jake Elguicze quantified these impacts, noting a ~$10 million headwind from the port strike pull-forward and a ~$6 million impact from the prior year's ERP timing. Regarding GLP-1s, Mr. Kurdikar noted that the larger opportunity lies in co-packaging with generic GLP-1 entrants, with active discussions underway with over ten potential partners, and more details will be shared at the May 2025 Analyst Day.

Kallum Titchmarsh questioned the timing of the decision to discontinue the patch pump program, pointing out that the competitive landscape and high investment needs were known factors for some time. He also asked about any post-spin restrictions from BD that could impact future M&A or product development.

Answer

CEO Devdatt Kurdikar explained that the decision was made after achieving FDA clearance for the pump and then conducting a market check for monetization opportunities. When no viable options surfaced, the company acted promptly to reallocate capital. He clarified that while there are restrictions on using technology acquired from BD at spin-off, there are no restrictions on future M&A, and creating financial flexibility through debt paydown is the key to pursuing new opportunities.

Kallum Titchmarsh inquired why customers who switched to Zio AT during a competitor's market disruption have remained with iRhythm and how this expanded user base could impact the upcoming Zio MCT launch.

Answer

CEO Quentin Blackford attributed customer retention to their positive experience with Zio AT, highlighting superior features like the 14-day continuous wear patch. He explained that many customers, already using Zio Monitor, found the product better than anticipated and decided to stick with it. He believes this success creates a 'real right to win' for the new Zio MCT product but deferred setting specific expectations for its launch.

Kallum Titchmarsh requested an update on the remediation of the FDA's 483 observations, asking about the specific changes made, what remains outstanding, and the nature of the dialogue with the FDA.

Answer

CEO Quentin Blackford stated that the company is pleased with its progress, having completed the majority of remediation activities. The target for completing FDA-specific items is mid-2025, with broader internal improvements extending through year-end. He described communication with the FDA as mostly administrative, with iRhythm providing monthly updates and the FDA acknowledging receipt without significant follow-up questions. A third-party audit is set to begin in Q2.

Kallum Titchmarsh from Morgan Stanley inquired about the commercial aspirations for the BioIntelliSense licensing agreement, the timeline for a multi-sensor product, and potential expansion into the inpatient monitoring market.

Answer

CEO Quentin Blackford positioned the BioIntelliSense deal as a long-term strategic investment to create a multi-sensing platform. He highlighted the potential to disrupt the hospital-to-home setting, leveraging iRhythm's ambulatory expertise. He noted this product would follow the next-gen MCT and also supports the company's home sleep test ambitions.

Kallum Titchmarsh requested more clinical color on the early rollout of Bolt 6X for below-the-knee cases and asked if Thunderbolt's technology could offer advantages for targeting distal clot.

Answer

CEO Adam Elsesser reported that Bolt 6X is converting physicians from open surgery due to its speed and predictability, with adoption spreading via word-of-mouth. Regarding Thunderbolt, he noted it was trialed with catheters down to the RED 62 for mid-sized vessels, but whether it offers a benefit in the most distal vessels remains an open question.

Kallum Titchmarsh from Morgan Stanley asked for management's perspective on the Zimmer Paragon acquisition, specifically regarding potential short-term benefits from disruption and any expected long-term changes to the competitive landscape.

Answer

CEO John Treace provided a brief response, stating that the company did not have much to comment on at this point. He emphasized that Treace Medical is focused on executing its own business plan and will observe how the acquisition and integration play out in the market.

Kallum Titchmarsh asked for commentary on business trends in January and February, whether the company was comfortable with Q1 consensus revenue estimates, and if there were any unusual revenue cadence assumptions for the year.

Answer

J. Koning (Executive) declined to provide intra-quarter commentary but noted the company exited Q4 with strong momentum. He expressed reasonable comfort with the current Q1 consensus revenue estimate, acknowledging the historical Q4-to-Q1 seasonality which he believes is already captured in analyst models.

Kallum Lewis Titchmarsh asked if SI-BONE could benefit from sales force disruption at competitors, how the company plans to achieve its rep productivity targets, and requested any new details on the ongoing DOJ investigation.

Answer

CEO Laura Francis confirmed that industry disruption presents an opportunity to hire top talent and detailed that rep productivity gains to over $2 million will come from a combination of direct reps, junior rep promotions, and the hybrid agent model. Regarding the DOJ inquiry, she stated there are no material updates, reiterated cooperation, and noted the government's focus appears to be on field-based education events and physician remuneration.

Kallum Titchmarsh from Morgan Stanley asked about the company's priorities for its strong cash balance, beyond the previously announced stock buyback. He also inquired about which performance metrics would be provided in 2025 and beyond, given the plan to stop reporting new center numbers.

Answer

CEO Tim Herbert said the company remains 'opportunistic' with its stock buyback plan, which has not yet been used, and will continue to evaluate investments that can grow therapy adoption. CFO Rick Buchholz detailed that for 2025, Inspire will guide on revenue, gross margin, and EPS. They will also continue to disclose U.S. sales territories and are considering disclosing the number of field clinical representatives to offer insight into commercialization.

Inquired about the status of the DOJ inquiry and the possibility of an earlier resolution. Also asked for the company's confidence in maintaining ~20% market growth before the PEERLESS II trial readout, which is considered a key long-term driver.

Answer

The DOJ inquiry is status quo with ongoing cooperation; a resolution is expected to take quarters or years rather than weeks or months. Confidence in near-term market growth is supported by the upcoming PEERLESS I data, which is expected to drive a shift away from catheter-directed thrombolysis and have a significant market impact in 2025 and beyond, bridging the gap until PEERLESS II.

Asked for details on the recent sales leadership change, including the rationale and any expected changes to strategy or incentives, and requested an update on the DOJ inquiry.

Answer

The sales leadership change was a planned retirement announced internally in October 2023. The new leader is expected to maintain the current successful commercial model with no radical changes anticipated. The company will continue to add sales reps at a measured pace. On the DOJ inquiry, there is no new update other than continued cooperation, and they do not see or expect any commercial impact from it.

Asked for an explanation of the Q4 gross margin, which was below expectations, and for guidance on how gross margins are expected to trend in 2024 and longer-term.

Answer

The Q4 gross margin was impacted by the LimFlow acquisition, international expansion, and a different product mix from emerging therapies. For 2024, margins are expected to be in the low 87% range for another quarter before picking up in the second half. Long-term, the company is still confident in maintaining a premium gross margin profile in the mid-80s.

Asked if the direct-to-consumer (DTC) campaign has revealed any surprising patient demographics or a different patient mix compared to those who typically receive SNM treatment.

Answer

The patient demographics responding to the DTC ads are largely consistent with the implanted patient population. The only notable difference is a higher proportion of men responding to the ads (about 25%) compared to the proportion of men who receive implants (about 15%). The company is launching new, more specific ads for fecal and dual incontinence to further refine its messaging and reach.