Lawrence Biegelsen

Lawrence Biegelsen questioned the ramp of Ardian (Simplicity), specifically asking if US sales could reach $400 million by fiscal 2028 (year three), similar to the Watchman ramp. He also inquired about the impact of the NCD's exclusion of isolated systolic hypertension and confirmed the current US run rate.

Answer

Chairman and CEO Jeff Martha affirmed that he would be disappointed if Simplicity didn't exceed a $400 million US sales target by year three, stating the final NCD would not hinder this. Dr. Laura Mauri, SVP and Chief Scientific and Medical Officer, clarified that isolated systolic hypertension affects a small percentage of the target population (less than 10%) and that the NCD overall makes access more practical with fewer delays and restrictions, emphasizing quality of life considerations. Martha did not confirm the $50 million US run rate.

Lawrence Biegelsen sought more precision on the Ardian ramp, specifically asking if Medtronic still expects to achieve $400 million in US sales by fiscal 2028 (year three), comparing it to the US Watchman ramp. He also asked about the impact of the NCD's exclusion of isolated systolic hypertension and confirmed the current US run rate.

Answer

Chairman and CEO Jeff Martha reiterated confidence in a faster ramp than the Watchman, stating the final NCD is an improvement and will not hinder progress. SVP and Chief Scientific and Medical Officer Dr. Laura Mauri clarified that isolated systolic hypertension (ISH) is a small patient population (less than 15% over 60, rare under 60) and its exclusion would affect less than 10% of the addressable market. She emphasized the NCD makes access more practical with fewer delays and restrictions.

Lawrence Biegelsen inquired about the new board committees for growth and operations, asking what they can achieve that was not possible before and when investors might see an impact.

Answer

Chairman & CEO Geoff Martha stated the committees will provide greater focus and support to management. He highlighted that the changes will bring in new directors with deep medtech expertise, increase the frequency of interactions with management, and drive urgency on portfolio management, capital allocation, and operational efficiency.

Lawrence Biegelsen asked for additional color on China's market recovery, including growth expectations for this year and next, and GE HealthCare's long-term strategy and risk mitigation in the region. He also inquired about confidence in achieving mid-single-digit revenue growth targets for 2026-2028 and China's necessary contribution.

Answer

President and CEO Peter Arduini noted improving tender activity and ongoing recovery in China, with second-half sales playing out as expected. He expressed optimism about China's long-term potential as a large healthcare market. VP and CFO Jay Saccaro added that while 2025 growth is expected around 3%, 2026 should see faster growth, with details to follow in February.

Lawrence Biegelsen asked about GE HealthCare's China market performance, including improving tenders, growth outlook for this year and next, and the company's long-term strategy and risk mitigation in the region.

Answer

President and CEO Peter Arduini noted improving stimulus and tender activity, with second-half China sales expected to be lower than the first half of 2025. He highlighted investments in market access and clinical selling, expressing optimism for China's long-term potential despite recent challenges from stimulus and anti-corruption campaigns. VP and CFO Jay Saccaro added that if China remains flat, mid-single-digit growth targets are intact, and the company expects to grow faster than 3% in 2026.

Lawrence Biegelsen of Wells Fargo sought an update on the commercial progress of Flurcato (FERCOTTO), including customer feedback and barriers to adoption, and also questioned the drivers behind the Q2 gross margin decline.

Answer

President & CEO Peter Arduini confirmed confidence in the $30M Flurcato sales target for 2025, noting progress in expanding manufacturing sites and securing reimbursement coverage. VP & CFO James Saccaro attributed the 180 bps gross margin decline to tariffs (approx. half the impact), a shift of R&D spending to COGS for near-launch products, and startup costs for new multi-vendor service contracts.

Lawrence Biegelsen questioned the future trajectory of U.S. Da Vinci system utilization, specifically whether it could continue to trend higher as Da Vinci 5 becomes a larger portion of the installed base, and how to interpret recent year-over-year declines in net placements. He also sought clarity on the implied Q4 gross margin, potential puts and takes for 2026 gross margin, and the directional impact of going direct in Italy, Spain, and Portugal.

Answer

Jamie Samath, CFO, stated that Intuitive's primary focus is on procedure growth, reflecting patient adoption, and that the company takes a customer-by-customer approach to capital, supporting both installed base expansion and Da Vinci 5 upgrades for efficiency. He noted that long-term U.S. utilization growth will depend on mixed dynamics across customer segments, especially with Da Vinci 5's early launch. Regarding gross margins, Samath deferred 2026 guidance to January but confirmed that going direct in Italy, Spain, and Portugal is expected to be slightly accretive to pro forma EPS due to eliminating distributor margins, partially offset by employee transfers.

Lawrence Biegelsen of Wells Fargo inquired about the outlook for system placements outside the U.S. following the recent da Vinci V approvals in Europe and Japan, and asked about the expected pace of system trade-ins in the U.S. now that the full launch is underway.

Answer

CFO Jamie Samath stated that the OUS rollout of da Vinci V will be measured, as the company needs to build training pathways and engage customers on its value proposition. He noted that force feedback instruments are not yet cleared in Europe, which may cause some customers to wait. For the U.S., he expects trade-ins to increase progressively over multiple years as customers evaluate the new system's clinical and financial benefits at their own pace.

Lawrence Biegelsen of Wells Fargo asked about the outlook for system placements outside the U.S. following da Vinci V approvals in Europe and Japan, and how to think about the pace and financial impact of system trade-ins in the U.S.

Answer

CFO Jamie Samath stated that the OUS rollout of da Vinci V will be measured, as the company needs to build training pathways and engage customers on its value. He noted Force Feedback instruments are not yet cleared in Europe, which may cause some customers to wait. For the U.S., he expects trade-ins to increase with the broad launch but anticipates the process will occur progressively over multiple years as hospitals evaluate the new system's clinical and financial benefits.

Lawrence Biegelsen inquired about the guidance's assumed year-over-year increase in conversion rate, the drivers to achieve a best-in-class conversion rate of 76% from the current 47%, and Kestra Medical Technologies' current market share (prescription/fitting) and timeline for achieving category leadership.

Answer

Vaseem Mahboob (Chief Financial Officer) stated that the guidance assumes a 2.5-3 point increase in the conversion rate, driven by improved in-network patient mix, strategic deployment of territory managers, adding regional payers (like Oscar Health), and investments in the RCM team. Brian Webster (President and CEO) estimated current market share at approximately 12% and indicated that achieving category leadership depends on the rate of sales coverage expansion, as Kestra currently covers just over 50% of U.S. territories.

Lawrence Biegelsen asked about the guidance's assumed year-over-year increase in the conversion rate, noting it appeared relatively small compared to the first quarter's performance, and questioned the drivers to achieve a 'best-in-class' conversion rate. He also inquired about Kestra Medical Technologies' current market share (prescription vs. fitting) and the timeline for achieving category leadership.

Answer

CFO Vaseem Mahboob stated that the guidance reflects a 2.5 to 3-point increase in the conversion rate, driven by improvements in prescription fill rate, bill rate, and collections performance. He emphasized that the biggest contributor is the 10-point increase in in-network patient mix since the IPO, with continued focus on deploying territory managers in high-prescription/high-payer regions, signing regional payers like Oscar Health, and investing in the RCM team. President and CEO Brian Webster estimated current market share at around 12%. He explained that achieving category leadership depends on the rate of sales coverage expansion, as Kestra currently covers just over 50% of the U.S. in terms of rep presence, with significant room for growth.

Lawrence Biegelsen asked about the guidance's assumed year-over-year increase in the conversion rate and the key drivers to achieve a "best-in-class" conversion rate of 76% from the current 47%. He also sought clarification on the company's current market share, distinguishing between prescription and fitting share, and the expected timeline to achieve category leadership.

Answer

CFO Vaseem Mahboob stated that the guidance reflects a 2.5-3 point increase in the conversion rate, driven by improved in-network patient mix (up 10 points since IPO), strategic deployment of territory managers, and continued investment in the RCM team. President and CEO Brian Webster estimated current market share at approximately 12%. He explained that achieving category leadership depends on the rate of sales coverage expansion, noting that Kestra currently covers just over 50% of the U.S. in terms of having a rep in a territory, indicating significant room for growth.

Lawrence Biegelsen of Wells Fargo asked for reasons behind the contact lens market's slowdown to 4% growth and questioned if consumer softness was a factor. He also sought a reaction to the 9% consensus EPS growth for fiscal 2026 and clarification on targets for operating income growth, the impact of tariffs, and the expected tax rate.

Answer

President and CEO Al White attributed the market slowdown partly to moderating price increases, especially outside the U.S., and acknowledged a potential for slight consumer softness. CFO Brian Andrews stated that while the company targets low double-digit constant currency OI growth over a multi-year period, specific 2026 guidance would be provided in December. He confirmed the plan is to offset tariff impacts but did not commit to a specific OI growth number for next year, suggesting the analyst's tax rate assumption was fair.

Lawrence Biegelsen of Wells Fargo asked for a breakdown of the reduced second-half guidance between market slowdown and other factors, and sought clarity on the aggregate impact of M&A dilution and tariffs for calibrating 2026 models.

Answer

CFO Tim Stonesifer attributed roughly two-thirds of the guidance reduction to the softer market and the remainder to some share loss. While declining to provide 2026 deal specifics, he offered that the full-year tariff impact could represent about 50 basis points of pressure next year, assuming no new offsets.

Lawrence Biegelsen of Wells Fargo asked CEO Ivan Tornos to elaborate on recent comments about diversifying Zimmer Biomet, rethinking capital allocation, and moving beyond a short-term focus on EPS dilution.

Answer

Chairman, President & CEO Ivan Tornos explained that with innovation gaps now filled, the company's focus has evolved towards diversification into higher-growth markets. He stated the goal is to reach a 5% WAMGR by 2027 and 6-7% by 2030 through responsible M&A, focusing on deals that change the standard of care, like Monogram and Paragon 28.

Lawrence Biegelsen of Wells Fargo asked two questions: first, for any preliminary commentary on fiscal 2026 margins and EPS growth considering the tariff impact, and second, for details on the post-separation margin outlook, including the effects of TSAs and below-the-line items.

Answer

Christopher DelOrefice, EVP & CFO, addressed both points. For the separation, he stated that the post-separation operating margin will be very similar to the current margin, with TSAs offsetting stranded costs and share buybacks from the cash distribution creating EPS accretion. For fiscal 2026, he provided an improved tariff outlook of around $275 million, a notable improvement from previous expectations, and confirmed that the BD Excellence program will continue to be a strong favorable margin driver.

Lawrence Biegelsen from Wells Fargo questioned if the company's reference to 'sustained double-digit growth' applies to 2026 and how this could be achieved given the U.S. renewal opportunity is expected to be flat year-over-year.

Answer

EVP, CFO & Treasurer Leigh Vosseller confirmed that sustained double-digit growth is a long-term goal. She explained that even with a flat number of new renewal opportunities in 2026, there is still a sizable growth opportunity from the 'waterfall' effect, as the company continues to capture the ~70% of customers whose warranties expired in prior periods over an 18-month timeframe.

Lawrence Biegelsen of Wells Fargo asked for clarification on how the Inspire V delay negatively impacted Q2 results, questioned why the GLP-1 impact is considered temporary, and inquired about visibility into DICE test growth.

Answer

CEO Tim Herbert clarified that the Q2 results, which met prior guidance, were impacted by several factors including patients waiting for Inspire V, Inspire IV inventory burn-down, and a pause in hiring. He reiterated his view that GLP-1s are a long-term positive, as they help high-BMI patients lose weight to become eligible for therapy. He confirmed the company monitors the entire patient funnel, including DICE test scheduling, to gauge demand.

Lawrence Biegelsen of Wells Fargo asked about the factors giving Stryker confidence to raise its full-year guidance amid market uncertainty and the impact of supply issues. He also inquired about the company's strategy regarding remanufactured instruments for soft tissue robotics.

Answer

Chair & CEO Kevin Lobo cited continued procedural strength, strong capital demand, and a healthy order book as reasons for the guidance raise. He noted that supply issues are limited to the Medical division and will persist through the year but are manageable. Regarding remanufactured instruments, Lobo stated that Stryker does not comment on pipeline products and will announce any entry into that market when a decision is made.

Lawrence Biegelsen of Wells Fargo asked for the gross margin outlook and questioned Interim CEO Brent Shafer about the board's rationale for selecting new CEO Andrew Heider, given his lack of direct device experience.

Answer

EVP & CFO Joel Grade advised focusing on operating margin due to accounting noise between COGS and SG&A, attributing the outlook primarily to volume impacts. Interim CEO & Chairman Brent Shafer highlighted Andrew Heider's strong operational discipline from his time at ATS, Danaher, and GE as a key asset for Baxter's complex manufacturing environment, expecting a quick ramp-up.

Lawrence Biegelsen of Wells Fargo asked for the gross margin outlook for the remainder of the year. He also sought more color on the Board's decision to hire Andrew Heider as the new CEO, given his lack of direct medical device experience, and inquired about his start date.

Answer

EVP & CFO Joel Grade advised focusing on operating margin rather than gross margin due to reclassifications and TSA income noise, reiterating that lower manufacturing volume is the primary driver of the outlook. Interim CEO & Chairman Brent Shafer explained that the Board was attracted to Andrew Heider's strong operational background at Danaher and GE, his track record of value creation, and his energetic leadership. He expressed confidence in a quick ramp-up and noted a start date would be announced soon.

Lawrence Biegelsen from Wells Fargo asked about the potential impact of the CMS competitive bidding proposal for CGM, seeking details on Medicare exposure, pricing risk, and the expected timeline.

Answer

President & COO Jacob Leach stated that fee-for-service Medicare represents about 15% of Dexcom's business and the immediate focus is ensuring no disruption for beneficiaries. EVP & CFO Jereme Sylvain added that based on historical precedent, the earliest impact would likely be 2027 and noted that any price compression could be accompanied by supplier consolidation, potentially increasing volume.

Lawrence Biegelsen of Wells Fargo inquired about the clinical significance of the STORM PE trial and sought an update on the FDA review timeline and management's enthusiasm for the Thunderbolt device.

Answer

CEO Adam Elsesser emphasized that STORM PE is the first randomized trial comparing mechanical thrombectomy with anticoagulation to anticoagulation alone, making it highly significant. He reaffirmed his strong excitement for Thunderbolt's potential, describing the ongoing FDA review as thorough and proceeding as expected, without providing a specific timeline.

Lawrence Biegelsen of Wells Fargo asked about the expected timing for the TAVR National Coverage Determination (NCD) update and the potential implications of a single-operator requirement. He also questioned the confidence in achieving the company's 2026 and beyond financial targets.

Answer

Larry Wood, Corporate VP of TAVR, stated the time to update the NCD is 'now' to cover asymptomatic patients and streamline requirements, which could boost capacity. CEO Bernard Zovighian and CFO Scott Ullem expressed strong confidence in meeting long-term growth and margin targets, citing numerous catalysts across the portfolio, while acknowledging external uncertainties like tariffs.

Lawrence Biegelsen of Wells Fargo asked about the expected timing for CMS to reopen the TAVR NCD and the potential implications of moving to a single-operator requirement. He also questioned if any known factors could prevent Edwards from achieving its 2026+ growth targets.

Answer

Corporate VP Larry Wood stated that the time to open the NCD is now, which would allow for coverage of asymptomatic patients and streamlined operator requirements, improving patient access. CEO Bernard Zovighian and CFO Scott Ullem expressed high confidence in achieving their long-term targets, citing strong momentum and multiple catalysts, while acknowledging external uncertainties like tariffs.

Lawrence Biegelsen of Wells Fargo questioned the slower sequential growth in OptuneLua prescriptions for non-small cell lung cancer (NSCLC) in Q2 and its implications for the full-year revenue forecast. He also asked for clarification on the updated METIS trial data for brain metastases.

Answer

CEO Ashley Cordova affirmed the lung launch is on track and that she is comfortable with full-year expectations. Frank Leonard, EVP & President - Novocure Oncology, added that repeat prescribers are building volume. Executive Chairman William Doyle explained the METIS data update was part of a standard data cleaning process common for trials with radiographic review, confirming the primary endpoint's statistical significance.

Lawrence Biegelsen of Wells Fargo inquired about the key growth vectors for Boston Scientific's Electrophysiology (EP) business over the next three to five years, including market growth, PFA adoption, geographic expansion, and new products. He also asked for color on the potential impact of proposed ASC reimbursement codes for ablation procedures.

Answer

CMO Dr. Ken Stein stated that growth will come from "all of the above," emphasizing the superior safety, predictability, and efficacy of the FARAWAVE PFA system. He highlighted strong international performance, noting market leadership in Japan despite a later entry. Dr. Stein also conveyed that the proposed rule allowing ablations in the Ambulatory Surgical Center (ASC) setting is viewed as a net advantage for Boston Scientific, given the FARAWAVE ecosystem's safety and economic benefits are well-suited for that environment.

Lawrence Biegelsen from Wells Fargo asked about the potential impact of CMS competitive bidding on CGMs, whether recent HHS comments on wearables could accelerate non-insulin CMS coverage, and if the dual ketone sensor could drive share gains.

Answer

Chairman and CEO Robert Ford stated that the CMS competitive bidding proposal was expected and would primarily impact DMEs, not manufacturers. He expressed support for the HHS Secretary's initiative promoting wearables for health. Ford definitively confirmed, stating "100%, yes," that the new dual glucose-ketone sensor is expected to accelerate market share gains among intensive insulin patients.

Lawrence Biegelsen of Wells Fargo & Company questioned if the current 3.5% adjusted operational growth could accelerate in 2026 and if operating margins could improve further next year.

Answer

EVP & CFO Joseph Wolk indicated that while not providing formal guidance, he expects 2026 sales growth to be better than 2025, driven by product momentum. Regarding margins, he was more cautious, citing the ongoing effects of Part D redesign and tariff uncertainty, but reaffirmed the company's commitment to growing earnings at or above its top-line rate.

Lawrence Biegelsen of Wells Fargo asked about the sustainability of the strong 22% OEM growth seen in Q4. He also requested early feedback on the Wrapsody launch and clarification on whether its revenue was incremental to the company's long-term organic growth targets.

Answer

Executive Fred Lampropoulos credited the strong OEM performance to the division's reliability and quality, leading to better-than-expected demand. Executive Raul Parra added that confidence in OEM is factored into the 2025 guidance. On Wrapsody, Parra clarified its U.S. launch revenue is included in the 2025 guidance but was not part of the original long-range CGI growth targets. Lampropoulos noted the initial market response is great and that 12-month data will be presented at the upcoming SIR meeting.