Matthew O'Brien

Matthew O'Brien followed up on the organic full-year expectation, seeking clarification on whether there was a slowdown in the core organic number. He also questioned the confidence in AirSeal's high single-digit to low double-digit growth rate, considering its scale, traditional laparoscopic penetration, and the cost implications in ASC settings.

Answer

Todd Garner, EVP and CFO, reiterated that the organic revenue numbers were simply more precise with the final 2025 data, with no change in the core expectation. Patrick Beyer, President and CEO, expressed strong confidence in AirSeal's growth based on clinical performance, global acceptance, and opportunities in both laparoscopic robotic and non-robotic procedures, without commenting on its specific scale.

Matthew O'Brien followed up on the organic constant currency full-year revenue guidance, questioning if it was lower than previously stated, and asked about the confidence in AirSeal's high single-digit to low double-digit growth rate given market dynamics.

Answer

Todd Garner, Executive Vice President and Chief Financial Officer, explained the slight adjustment in organic growth guidance was due to the finalization of 2025 numbers and the impact of the GI business exit. Patrick Beyer, President and Chief Executive Officer, expressed strong confidence in AirSeal's growth, citing clinical performance, customer demand, and opportunities in both global laparoscopic robotic and non-robotic procedures.

Matthew O'Brien asked about the fiscal year guidance, specifically the cadence and Q3 seasonality, and the factors considered for the full year. He also inquired about the use of proceeds from the recent capital raise and how it might accelerate growth initiatives.

Answer

Vaseem Mahboob, Chief Financial Officer, explained that Kestra is a run-rate business driven by prescription volume, in-network mix, and revenue cycle management initiatives, with a guidance philosophy focused on consistent quarterly results. Brian Webster, President and Chief Executive Officer, added that the capital raise de-risks future needs and fortifies the balance sheet, with planning underway to determine the impact on growth strategies for the next couple of years.

Matthew O'Brien asked about Kestra's updated fiscal year 2026 guidance, specifically inquiring about the revenue cadence, potential Q3 seasonality, and other factors influencing the full-year outlook. He also followed up on the strategic use of proceeds from the recent capital raise to accelerate growth initiatives.

Answer

CFO Vaseem Mahboob explained that revenue growth is driven by prescription volume, in-network mix, and revenue cycle management initiatives, emphasizing a guidance philosophy focused on consistent quarterly results. President and CEO Brian Webster stated the additional capital de-risks future needs, fortifies the balance sheet, and will be allocated to key growth drivers, with specific plans to be outlined during the upcoming annual planning process.

Matthew O'Brien asked about the drivers behind the strong sequential prescription growth, Kestra Medical Technologies' current annualization of cases, and the expected percentage of all WCD prescriptions for ASSURE by year-end. He also questioned whether new sales reps focus on converting existing accounts or expanding the market, and the impact of the competitor's recent clinical trial.

Answer

Brian Webster (President and CEO) attributed prescription growth to improving metrics for fully productive reps and successful onboarding of new reps. He noted that new reps initially target high prescribers, while existing reps focus on deeper penetration and opening new accounts to expand the market. He also viewed the competitor's large German WCD study as beneficial for overall market expansion, shining a light on the ongoing need for WCDs.

Matthew O'Brien inquired about the drivers behind the strong sequential and year-over-year prescription growth in the quarter, asking about the current market share and the company's target for market share by the end of the fiscal year. He also asked whether new sales representatives primarily focus on converting existing accounts from competitors or on expanding the overall market.

Answer

President and CEO Brian Webster attributed prescription growth to improving metrics for fully onboarded reps and new reps successfully ramping up productivity. He estimated current market share at around 12%. Webster explained that new reps are directed to high-prescribing accounts first, leveraging pre-existing relationships where applicable, while established reps focus on further penetrating existing accounts and opening new ones to expand the market. He also noted that the competitor's recent study on sudden cardiac death risk would help expand the overall WCD market.

Matthew O'Brien asked about the Q4 2025 guidance implying deceleration on a two-year stack basis, especially domestically, and why the company is comfortable with low double-digit growth in 2026 despite this.

Answer

Jereme Sylvain, CFO, explained that Q4 seasonality has normalized over years, with Q1 now having a seasonality benefit. He emphasized that underlying user growth remains solid, and the delta between unit volume growth and revenue is narrowing. He stated that the 2026 base case assumes record new patient years with existing coverage, not necessarily new coverage.

Matthew O'Brien questioned the implied deceleration in Q4 guidance on a two-year stack basis, particularly domestically, and how this aligns with confidence in low double-digit growth for 2026.

Answer

Jereme Sylvain, CFO, explained that the Q4 guidance reflects a normalization of business seasonality, with Q4's contribution to the full year declining and Q1's increasing. He stated that underlying user growth remains solid, and the delta between unit volume growth and revenue is narrowing. He believes these factors support comfort with low double-digit growth in 2026.

Matthew O'Brien asked about the approximate $70 million reduction in the CMD outlook for next year, questioning if it was evenly split between the two EP products and if these were emerging customers outside the top three. He further clarified if the EP and neuromodulation impacts were from emerging customers and if the neuromodulation impact was from an existing, sizable customer seeing less adoption.

Answer

Payman Khales, President and CEO-elect, clarified that the approximate $70 million reduction is for three products (two EP, one neuromodulation), not just two EP products. He confirmed these are emerging customers, part of a group of 10 customers with products in the market or launch phases. Khales stated that Integer's EP business is broad, serving both large OEMs and others, and could not be more specific. For neuromodulation, he confirmed that one customer, which had sizable growth in 2025, is now seeing less market adoption, leading to a significant decline in 2026.

Matthew O'Brien sought to confirm the estimated $70 million reduction to the CMD outlook for 2026 across three products. He also asked for clarification on whether 'emerging customers' are those outside Integer's top three largest clients and if the neuromodulation impact involves a sizable customer experiencing less adoption.

Answer

Payman Khales, President and CEO-elect, confirmed the estimated reduction was 'in the ballpark' for three products (two EP, one neuromodulation). He clarified that 'emerging customers' are newer clients with new products and therapies, not necessarily the largest OEMs. He also confirmed that the neuromodulation customer had significant growth in 2025 but expects a sizable decline in 2026 due to slower market adoption.