Matt O'Brien

Matt O'Brien of Piper Sandler Companies questioned why the absolute dollar growth forecasted in the fiscal 2026 guidance appears lower than the growth achieved in fiscal 2025, and also asked about the Q4 gross margin and adjusted EBITDA performance.

Answer

CEO Brian Webster confirmed there was no unusual competitive activity impacting the forecast. CFO Vaseem Mahboob attributed the growth profile to the timing of sales representative hiring in the second half of fiscal 2025, who are now in their ramp-up phase. Regarding Q4 performance, Mahboob explained that higher-than-expected OpEx was due to public company transition costs and strategic investments in commercial leadership, while gross margin was affected by the timing difference between revenue recognition and fitting costs.

Matt O'Brien asked about the slower-growing half of Medtronic's business, questioning whether organic innovations like tibial stimulation and robotics are sufficient to lift these areas or if M&A will be required.

Answer

Chairman & CEO Geoff Martha asserted that the slower-growth businesses have their own organic accelerators poised to drive growth. He cited Neurovascular (lapping VBP/recall), Pelvic Health (tibial launch), and Peripheral Vascular (new products). He also emphasized the durable competitive positions of core franchises like Spine and Cardiac Rhythm Management, suggesting a broad-based acceleration is expected.

Matt O'Brien from Piper Sandler Companies pressed for more specific guidance on Nevro's revenue for the remainder of 2025, referencing prior management commentary. He also asked if Nevro's Q2 adjusted EBITDA represented a low point and what further cost synergies could be realized in SG&A.

Answer

SVP & CFO Kyle Kline and President & CEO Keith Pfeil declined to provide specific Nevro revenue guidance, citing uncertainty as major integration actions have just begun. Regarding EBITDA, Kline stated it's hard to call a low watermark as it depends on future sales performance. He noted that with SG&A still over 60% of Nevro's sales, it remains a key area of focus for cost actions in the second half of the year.

Matt O'Brien sought more detail on the acceleration in competitive conversions, asking what drove the increase and whether the record new patient starts from MDI were a separate, additive trend.

Answer

Eric Benjamin, EVP, Chief Product & Customer Experience Officer, confirmed that both MDI conversions and competitive conversions accelerated during the quarter. He attributed the broad-based strength to a combination of impactful product innovation with Omnipod 5, a highly accessible pay-as-you-go model, and strong commercial execution by the field team.

Matt O'Brien of Piper Sandler Companies sought to understand the drivers behind the acceleration in competitive conversions and asked if the record new patient starts from MDI were a separate, additive trend.

Answer

EVP, Chief Product & Customer Experience Officer Eric Benjamin confirmed that both MDI conversions and competitive conversions accelerated independently. He attributed the overall strength to a combination of three factors: impactful product innovation with Omnipod 5, a highly accessible 'pay-as-you-go' pharmacy model, and strong execution by the commercial team in the field.

Matt O'Brien from Piper Sandler Companies asked about the momentum across the new product portfolio and the potential impact of reimbursement tailwinds. He also sought details on the ASC opportunity with the upcoming new product and any associated investment needs.

Answer

CEO Laura Francis described the growth as broad-based, with strong demand for existing solutions and rapid adoption of new products like Granite 9.5 and iFuse TNT, which will benefit from an upcoming NTAP. For the ASC opportunity, she noted it's a natural extension, with 35% of SI joint fusions already performed there, and the new 2026 product is specifically targeted for that setting. CFO Anshul Maheshwari added that the launch requires no major new investment as it fits within the existing commercial infrastructure.

Matt O'Brien of Piper Sandler Companies asked about the drivers behind another quarter of record Mako system installations, especially with the new Mako 4 launch. He also inquired about Stryker's M&A strategy and the potential for another sizable transaction.

Answer

Chair & CEO Kevin Lobo expressed pleasant surprise at the seamless transition to Mako 4, which saw no pause in demand, driven by strong execution and surgeon excitement for new applications like Revision Hip. On M&A, Lobo confirmed Stryker has the financial bandwidth for another Inari-sized deal, maintains a healthy pipeline, and expects to announce a few tuck-in deals this year, without ruling out something larger.

Matt O'Brien of Piper Sandler Companies pressed on the full-year guidance, noting the raise was less than the Q2 beat, and asked if this implied conservatism, competitive concerns, or other factors.

Answer

EVP & CFO Jereme Sylvain responded that the company is 'bullish on this business' and focused on meeting its commitments. He pointed out that the top end of the revised guidance range does pass through the entirety of the Q2 constant currency beat, signaling confidence while maintaining a commitment to deliver on their stated goals.

Matt O'Brien of Piper Sandler Companies inquired about pricing dynamics in the pharmacy channel, particularly for supply kits, and asked about the customer churn rate.

Answer

CFO Stephen Feider clarified that the Islet average selling price (ASP) in the pharmacy channel declined due to increased PBM rebates, a sign of successful adoption. He noted that supply kit pricing was impacted by stocking dynamics, not ASP changes. Feider declined to provide a specific churn rate but expressed high confidence in retention, stating the company prioritizes the pharmacy channel because it is the most financially advantageous, which implies a favorable retention profile.

Matt O'Brien pressed on the decision to lower the top end of the full-year revenue guidance despite a strong quarter, asking if it was due to currency or a specific product issue, particularly in the high-growth C&V segment. He also inquired about Integer's exposure to the renal denervation (RDN) market following positive reimbursement news.

Answer

COO Peyman Khales confirmed the guidance change was not currency-related. He explained the second-half forecast reflects tougher year-over-year comps, especially in Q4 (which grew 11% last year), and the anniversary of the New Ross facility capacity expansion. On RDN, Khales described it as a promising emerging technology where Integer's EP capabilities are transferable. He noted that while current exposure is small due to the market's nascent stage, it could provide a tailwind as the market grows.

Matt O'Brien from Piper Sandler Companies asked about the adoption trend for concomitant procedures, specifically how the 60% rate among EPs has evolved recently. He also inquired about the strength of the competitive "moat" being built in the EP business with the combination of Farapulse, Opel mapping, and concomitant cases.

Answer

CMO Dr. Ken Stein clarified that the 60% adoption is among EPs who implant WATCHMAN and noted the trend is very new, with reimbursement only beginning in October 2024, but sequential growth continues. CEO Mike Mahoney reinforced the goal of overall EP leadership, citing their success in Japan as proof of their differentiated advantage. He also highlighted the Interventional Cardiology business, which grew high-double digits, as another example of the company's ability to drive growth in mature markets with innovative technology.