Matthew O'Brien

Matthew O'Brien asked about the potential for market acceleration in type 2 diabetes, drawing a parallel to the significant increase in type 1 pump penetration over the last decade. He questioned if type 2 could see similar penetration growth and what might prevent it.

Answer

Chief Product and Customer Experience Officer Eric Benjamin affirmed that they see the current 5% penetration in type 2 as having the potential to double or triple. While he noted it's too early to predict the exact pace, he expressed optimism that the same 'technology renaissance' that drove type 1 adoption—smarter, less invasive solutions—is now being applied successfully to the type 2 population.

Matthew O'Brien asked how Insulet plans to defend its position and pricing in the pharmacy channel, given increasing competition from other pump manufacturers entering the space.

Answer

President and CEO Jim Hollingshead asserted Insulet's very strong position, emphasizing that Omnipod's product design is a natural fit for the pharmacy channel. He highlighted the company's deep experience, having signed its first PBM contract in 2017, and described the relationships and negotiations as a 'win-win' based on volume for rebates. He expressed high confidence in their ability to defend their position.

Matthew O'Brien of Piper Sandler Companies questioned management's confidence in its full-year guidance and asked how the company plans to mitigate disruption from recent high-level executive departures.

Answer

EVP & CFO Kevin Waters expressed high confidence in the guidance, noting it was slightly increased. He cited strong visibility into the 6-9 month capital sales cycle and a large, experienced sales force as key stabilizers. He reiterated that this established team and process would ensure execution continues at a high level despite the leadership changes.

Matthew O'Brien inquired about the current capital equipment (CapEx) environment amid potential slowdowns and asked for an update on the strong Q1 handpiece sales, questioning if they were driven by deferred procedures from Q4.

Answer

Sham Shiblaq, an executive, stated that PROCEPT has not seen a material shift in capital purchasing sentiment, noting a record-high sales pipeline and strengthening relationships with large IDNs. Executive Kevin Waters clarified that the strong Q1 handpiece performance was driven by organic business strength, as any benefit from Q4 procedure deferrals was offset by lingering saline supply issues in January and February, making the net impact neutral.

Matthew O'Brien of Piper Sandler questioned the assumptions behind the 2025 handpiece average selling price (ASP) and inquired about the drivers for the higher-than-expected 2025 operating expense guidance, particularly the investments in the WATER IV clinical trial.

Answer

CFO Kevin Waters clarified that the 2025 handpiece ASP is guided to be stable at approximately $3,200, noting that the majority of procedures will still use lower-priced AquaBeam handpieces. Regarding operating expenses, Waters explained the $66 million year-over-year increase includes about $20 million in non-cash stock compensation and a targeted, front-loaded $10 million investment to accelerate enrollment in the WATER IV prostate cancer trial.

Speaking on behalf of Matthew O'Brien, an analyst asked about competitive dynamics in BPH, specifically regarding share shifts from legacy procedures like TURP and GreenLight. A second question sought more color on short-term and long-term profitability expectations.

Answer

Executive Reza Zadno stated that the vast majority of cases are coming from TURP and GreenLight, and anecdotally, surgeons report market expansion. CFO Kevin Waters addressed profitability by pointing to a clear pathway forward, evidenced by strong revenue growth, controlled operating expenses, and a record 63.2% gross margin in Q3. While not providing a specific profitability date, he emphasized that the focus remains on investing for top-line growth.

Matthew O'Brien of Piper Sandler Companies inquired about the cause of the elective limb deformity case slowdown in Q2 and the impact of missed international set sales. He also asked why EBITDA guidance remains steady despite a faster-than-expected expansion of OPSB clinics.

Answer

CEO Dave Bailey explained the limb deformity slowdown was a temporary ebb and flow early in the quarter that has since normalized, and he is not concerned long-term. He also noted the accelerated OPSB expansion is demand-driven. CFO & COO Fred Hite added that the new clinics are performing within their financial models, allowing the company to absorb the expansion costs while maintaining its full-year EBITDA guidance.

Matthew O'Brien asked about the drivers behind the Scoliosis business's strong Q1 performance, the future contribution of the VerteGlide system, and the potential market share growth. He also questioned why the full-year revenue guidance was not raised more significantly given the Q1 beat.

Answer

CEO David Bailey attributed the Scoliosis segment's success to continued momentum from H2 2024, driven by high surgeon adoption, new account openings via ApiFix and 7D placements, and the company's comprehensive approach to the continuum of care. Regarding guidance, Bailey noted management's typical caution ahead of the key summer months and a deliberate strategy to manage international business, particularly in Latin America, to improve cash flow.

Matthew O'Brien of Piper Sandler sought confirmation on OPSB's 2024 performance and its 2025 growth outlook, asking for specifics on what was exceeding expectations. He also questioned if the reduced instrument set deployment for 2025 risked under-resourcing the core trauma and spine businesses.

Answer

Executive David Bailey confirmed OPSB is growing rapidly and is expected to grow well north of 20% in 2025. He specified that demand for both clinic expansion and products like DF2 is higher than anticipated, necessitating a search for additional manufacturing capacity. Regarding set deployments, CFO Fred Hite asserted that the planned $15 million is the right amount for 2025, with a focus on new products. Bailey added that the business would not be starved, as the need for legacy set deployments has diminished while newer, high-ASP products are less capital-intensive.

Matthew O'Brien of Piper Sandler inquired about the performance of the Boston O&P acquisition, its alignment with expectations, and the reasons for a perceived slowdown in the Trauma & Deformity (T&D) segment.

Answer

Executive David Bailey confirmed that Boston O&P is performing as expected, with its new sales channel showing early positive returns. Executive Fred Hite and David Bailey clarified that the T&D segment's year-over-year comparison was impacted by a large, non-repeating international stocking distributor order in Q3 of the prior year, particularly from the Pega business conversion in Latin America and Europe. They affirmed that domestic trauma performance was extremely strong and expressed no underlying concern with the business.

On behalf of Matthew O'Brien, Anna from Piper Sandler Companies questioned the decision to only raise the low end of the revenue guidance despite a Q2 beat and favorable FX. She also sought clarity on the components driving the increased EPS guidance.

Answer

EVP & CFO Todd Garner clarified that the guidance reflects an expectation of gradual improvement in the second half of the year. He broke down the $0.09 EPS guidance increase, attributing approximately $0.03 each to favorable FX, lower tariff impacts, and strong operational performance.

Matthew O'Brien asked about the drivers behind the significant outperformance in the pharmacy channel in Q1, the rationale for raising the full-year outlook, and the factors contributing to strong new patient additions despite seasonal softness.

Answer

CEO Sean Saint attributed the pharmacy success to their pay-as-you-go model being highly attractive to health plans, leading to faster-than-expected adoption following the Prime Therapeutics contract. CFO Stephen Feider added that the Q1 pharmacy performance is sustainable and not a one-time event. Feider also explained that strong patient adds were driven by recent product launches like the Color iLet and Libre 3 integration, plus a maturing sales force, noting the 20 reps hired in Q1 did not contribute to the quarter's results.

Matthew O'Brien sought clarification on the patch pump timeline, questioning if the 'commercialize by end of 2027' guidance was more conservative than previous expectations. He also asked if iLet's ease-of-use advantage was at risk from a competitor's new, simplified algorithm.

Answer

CFO Stephen Feider and CEO Sean Saint clarified that the patch pump timeline has been consistent, with commercialization (i.e., generating revenue) expected by the end of 2027. Saint differentiated iLet's algorithm, which learns and adapts based on weight, from competitors' systems that automate settings, arguing iLet maintains a significant ease-of-use advantage.

Phil on for Matthew O'Brien of Piper Sandler & Co. asked about the expected quarterly revenue cadence for 2025 and the reasons for the guided 10% OpEx growth, given the lower 8% growth in Q1.

Answer

CFO Anshul Maheshwari explained that while the company doesn't guide quarterly, historical seasonality is changing due to new products. The guidance assumes a slight Q2-to-Q3 sequential decline but a strong Q4. He attributed the full-year 10% OpEx growth forecast to the timing of R&D investments for new products, higher sales commissions tied to revenue, and a slight increase in G&A, while noting leverage would remain strong.

Matthew O'Brien asked about the company's pricing trend, which decelerated to 10 basis points, and questioned whether this tailwind is diminishing and could potentially become a headwind for selling higher-priced new products.

Answer

CFO and EVP Suketu Upadhyay responded that the Q1 pricing result was better than their initial guidance, leading to an improved full-year outlook of roughly flat pricing. He explained the deceleration from 2024 was anticipated as one-time international benefits did not repeat. Upadhyay expressed confidence in near-term price stability, citing strong new product pricing, a rational competitive environment, and improved internal governance.

Matthew O'Brien from Piper Sandler & Co. asked about the strong performance in the S.E.T. segment, its sustainability into 2025, and its potential impact on the company's overall growth and profitability profile.

Answer

CEO Ivan Tornos highlighted this was the fourth consecutive quarter of mid-single-digit or better growth for S.E.T. and expressed confidence in its sustainability due to innovation. CFO Suketu Upadhyay added that the segment's key businesses have margins above the company average, making it an attractive contributor to overall growth and EBITDA.

Matthew O'Brien from Piper Sandler inquired about the rollout of the 15-day G7 sensor, its integration with insulin pumps, and the potential gross margin contribution in future years.

Answer

COO Jacob Leach confirmed they are working with pump partners for compatibility at launch and securing payer coverage. CFO Jereme Sylvain added that the gross margin benefit will be 'more measured' over time rather than immediate, as it will take time for patients to get new prescriptions and transition.

Matthew O'Brien asked if DexCom expects a record year for new patient starts in 2025 and what the composition of that growth would be across different patient segments.

Answer

CFO Jereme Sylvain confirmed they expect a record patient year for their G-Series and D-Series products. He anticipates growth from continued penetration in the insulin-intensive segment, steady adoption in the basal population, and a greater contribution from newly covered non-insulin Type 2 patients. CEO Kevin Sayer added that international coverage wins would also be a significant contributor.

Matthew O'Brien questioned how Dexcom could achieve its 2025 absolute dollar growth target given that new patient cohorts like basal and Stelo may have lower utilization, alongside increased competition.

Answer

CFO Jereme Sylvain acknowledged lower Stelo utilization but emphasized it's a new category with easy year-over-year comparisons. He pointed to continued growth from record new patient starts in the core insulin business. CEO Kevin Sayer added that the launch of the 15-day G7 product in 2025 will also be a 'great revenue enhancer.'

Phil, on behalf of Matthew O'Brien, asked for updated thoughts on M&A priorities post-Spine divestiture and inquired about the ongoing partnership with VB Spine for the Mako Spine launch.

Answer

CFO Preston Wells confirmed Stryker has ample liquidity for deals. CEO Kevin Lobo reiterated that tuck-in acquisitions for existing businesses remain the top priority. Regarding Mako Spine, Lobo explained that Stryker will partner with VB Spine, which has an exclusive implant agreement, leveraging the same sales force that transferred from Stryker to ensure a smooth collaboration.

Matthew O'Brien questioned the implied growth rate for the Inari acquisition, suggesting it was below market. He also asked what factors could potentially drive Stryker's performance to the low end of its 8-9% organic growth guidance for 2025, given current momentum.

Answer

CEO Kevin Lobo clarified that the Inari sales forecast of $590 million is for a 10-month period and assumes continued high double-digit growth. He stated that while he feels no risk on the downside of the guidance, the range accounts for potential changes in the macro environment later in the year.

Matthew O'Brien sought to reconcile the report of record Mako installations with the flat revenue in the 'Other Ortho' line and asked about the company's confidence in continuing to outgrow the ortho market.

Answer

CFO Glenn Boehnlein explained the 'Other Ortho' revenue was impacted by deal mix, with more rentals in the second half of the year which have lower initial revenue recognition, and by declining bone cement sales. CEO Kevin Lobo expressed high confidence in sustained outperformance, citing strong product momentum across Trauma & Extremities (Pangea), Hips (Insignia), and Knees (Mako, cementless).

Matthew O'Brien of Piper Sandler inquired about the mix of strategic versus financial sponsor interest in NewCo and asked for perspective on its valuation, referencing the prior acquisition costs of NeoTract and Palette.

Answer

CEO Liam Kelly confirmed that the inbound interest represents a 'healthy mix' of both strategic and private equity firms, which was greater than anticipated. He declined to comment on specific valuations, stating the process will be guided by maximizing shareholder returns through a competitive process and comparison to public market values.

Matthew O'Brien questioned the growth potential of the acquired Biotronik assets, particularly the Free cell bioabsorbable scaffold, and asked for details on the acquisition's sales figures, margin profile, and growth drivers.

Answer

CEO Liam Kelly expressed confidence, highlighting the acquired portfolio's historical 5.4% CAGR (over 6% normalized). He differentiated the Free cell product as metallic, not polymer, offering future optionality. Kelly stated the deal would add approximately EUR 91 million in Q4 2025 revenue, annualizing to around $375 million, and is expected to grow at 6% or better due to portfolio and geographic synergies.

Matthew O'Brien asked for clarification on the duration of the OEM business pressure into the next year and whether the weakness in UroLift was spreading beyond the physician's office to hospitals or ASCs. He also probed for high-level thoughts on the 2025 outlook.

Answer

Liam Kelly, Chairman, President and CEO, stated that the headwind from the OEM customer's vertical integration is expected to continue through Q3 of the following year. He confirmed that UroLift's challenges remain contained to the physician office setting, which will face another reimbursement cut in 2025 before stabilizing. Kelly deferred providing specific 2025 guidance until the Q4 earnings call.

Matthew O'Brien asked if the write-off related to the AMF Medical agreement for the Sigi pump signals a potential delay in its development timeline.

Answer

CEO John Sheridan stated the opposite is true. He explained that terminating the agreement and bringing development to San Diego gives Tandem more control and flexibility, which should improve the time to market for the Sigi pump rather than delay it.

Matthew O'Brien of Piper Sandler asked if Q4 weakness was due to competitive pressure and expressed concern about hitting the 2025 guidance, which assumes a significant back-half ramp, given the risks of a sales force restructuring.

Answer

CFO Leigh Vosseller acknowledged the competitive environment but stated no single factor caused the Q4 softness. She said the guidance ramp reflects seasonality plus expected productivity gains from the new sales force in H2. CCO Mark Novara added that the competitive landscape was static and they held their own.

Matthew O'Brien asked why the Q4 guidance was raised by less than the Q3 beat and why Q3's revenue upside didn't yield more gross margin or EBITDA benefit.

Answer

EVP and CFO Leigh Vosseller explained the guidance was raised by the beat amount, with the U.S. Q4 guide reflecting normal seasonality and OUS results impacted by a $5 million order pull-forward from Q4 into Q3. The margin was affected by modest headwinds from the scaling Mobi launch and a higher mix of OUS sales, which carry a lower gross margin.

Matthew O'Brien questioned why the company did not raise its full-year revenue guidance after a strong quarter, asked for the source of the EBITDA outperformance, and sought more detail on the drivers of pain management growth.

Answer

CFO Angela Wirick explained that it is still early in the year to adjust top-line guidance and attributed the EBITDA beat to significant SG&A leverage from controlled spending and increased scale. CEO Michael H. Carrel noted that pain management growth is primarily driven by increased adoption of the time-saving cryoSPHERE MAX probe, not by price increases.

Matthew O'Brien of Piper Sandler & Co. sought clarification on the sources of operating leverage for the 2025 EBITDA target and questioned if the ~12.5% revenue growth guidance represents a new, lower long-term growth expectation for the company.

Answer

CFO Angela Wirick explained that leverage will come from SG&A and R&D growing slower than revenue, with new U.S. products buffering international gross margin pressure. CEO Michael H. Carrel affirmed confidence in the 2025 guidance and stated that while more long-term details will be shared at the Analyst Day, he expects a strong double-digit growth rate for a long time.

Representing Matthew O'Brien, an analyst asked if increased competition in the open appendage management market is helping drive overall market growth. A follow-up question requested an update on the HEAL-IST clinical study.

Answer

CEO Michael H. Carrel affirmed that competition is beneficial as it raises market awareness. He expressed confidence in AtriCure's product portfolio, particularly the new AtriClip FLEX-Mini, which has received excellent feedback. Regarding the HEAL-IST study for inappropriate sinus tachycardia, Mr. Carrel noted solid enrollment but stated that a significant data update is not expected until sometime in 2025, describing the study as important for a niche patient population but not a primary long-term growth driver.

An analyst on for Matthew O'Brien of Piper Sandler asked about the potential for suppliers to pass on tariff costs, whether customers were pulling forward orders, and for an update on the renal denervation (RDN) market.

Answer

CFO Diron Smith stated that Integer has not seen significant tariff-related price increases from its primarily U.S.-based suppliers and is not seeing customers pull forward orders. CEO Joseph Dziedzic added that while RDN is an exciting market where Integer's capabilities fit well, he could not provide specific details on current demand or its expected contribution to growth.

Matthew O'Brien asked about the potential "halo effect" of the new coating technologies from recent acquisitions, particularly in EP and Neurovascular. He also inquired about potential benefits from a major customer's new manufacturing facility in Galway, Ireland, where Integer also recently expanded.

Answer

President and CEO Joseph Dziedzic explained that the coating acquisitions provide a service that allows for earlier customer engagement in the design process, helps simplify customer supply chains, and enables Integer to participate in fast-growing end markets where it may not currently manufacture products. Regarding the Galway facility, Dziedzic acknowledged the significant development work in the region and Integer's investment to support it, but declined to comment on specific customer programs, stating the benefits are factored into the overall 2025 guidance.

Matthew O'Brien asked about the implied Q4 two-year stacked growth deceleration, potential inventory destocking of traditional EP products due to the PFA shift, and the reason for the lower R&D spending in Q3.

Answer

Joseph Dziedzic, President and CEO, attributed the Q4 comparison to a very strong Q4 last year, making it the toughest comp. He stated the company hasn't seen a meaningful inventory shift away from traditional EP products but sees PFA as a net tailwind. He clarified that R&D spending was not cut; the lower net expense was due to a higher level of customer-funded development revenue recognized in Q3, which normalized the quarterly pattern compared to prior years.

Matthew O'Brien asked about the market dynamics in peripheral thrombectomy, specifically growth in PE versus DVT and the rate of conversion from lytics. He also questioned if the company could reach its 70% gross margin target earlier than guided.

Answer

CEO Adam Elsesser explained that growth is strong in both PE and DVT, with a larger percentage coming from PE, and that conversions are primarily from other mechanical devices, not lytics, due to CAVT's superior technology. CFO Maggie Yuen stated that while they are on track, it is premature to pull forward the 70% margin goal, citing Q2 investments in the Ruby XL launch as a near-term headwind.

Matthew O'Brien questioned if the Q4 revenue miss could be fully attributed to the 11 lost reps given the strong start in October, and expressed skepticism about the steep revenue ramp required to meet 2025 guidance, noting that sales transitions take time.

Answer

CEO Antony Koblish clarified that the impact was severe because the departures were concentrated in November and December and included not just TMs but also directors and a manager, causing momentum to halt in key territories. CFO Roberto Cuca added that the company entered Q4 with a lower-than-planned headcount. Regarding the 2025 ramp, Cuca stated that backfilling territories is faster than establishing new ones and that the sales force is already near its year-end target size, allowing for normal seasonal growth.

Matthew O'Brien of Piper Sandler questioned the 2025 gross margin guidance, asking why it isn't projected to recover more strongly. He also inquired about the revenue assumptions for the new AYON system in the back half of the year and the potential purchasing models for customers.

Answer

CFO Matthew Hill explained that the 60% gross margin guidance for 2025 assumes that the geographic, product, and segment mix trends observed in 2024 will persist. CEO Charles Goodwin added that the guidance does not yet reflect the accelerated AYON 510(k) submission, and initial revenue contribution is budgeted to be minimal due to a planned soft launch. Goodwin detailed that AYON will be available for outright purchase or lease, with special pricing for existing Apyx One customers and competitive trade-in programs to drive adoption.

Matthew O'Brien of Piper Sandler questioned the growth trajectory to reach the 10,000-organ target by 2028, noting a simple linear projection appears insufficient. He also asked about the expected pace of operating margin improvement beyond 2025.

Answer

CEO Waleed Hassanein explained that the path to 10,000+ organs is not linear and will be driven by significant growth from the next-gen clinical programs, which aim to "resurrect" the lung market and deeply penetrate the DBD heart market. CFO Gerardo Hernandez stated that for 2025, the company expects modest operating margin improvement and declined to provide a longer-term forecast.

Matthew O'Brien from Piper Sandler inquired about the wide Q4 guidance range and whether the midpoint was the most likely outcome. He also asked for a breakdown of the 500-basis-point sequential gross margin decline and questioned if there was any price degradation.

Answer

CEO Waleed Hassanein declined to comment on a specific point within the guidance range but reiterated confidence. CFO Stephen Gordon attributed the margin decline to non-recurring investments and the 'double hit' of carrying costs for owned planes in maintenance while paying for third-party logistics. Both executives firmly denied any pricing pressure.

Matthew O'Brien of Piper Sandler questioned if the long-term goal of mid-30s EBITDA margins is still achievable with the Nevro acquisition and asked about the risk of sales force dislocation one year after the NuVasive merger.

Answer

CFO Keith Pfeil affirmed the company's focus remains on EPS growth but believes the mid-30s EBITDA margin goal is still achievable over time by focusing on gross profit expansion and managing SG&A. CEO Dan Scavilla addressed sales force concerns, stating that retention has been 'great' and better than anticipated, attributing the success to strong leadership, new product introductions, and competitive compensation.

An analyst on behalf of Matthew O'Brien from Piper Sandler questioned the updated revenue guidance, which implies slower Q4 growth despite a strong Q3, and sought color on 2025 growth expectations.

Answer

COO & CFO Keith Pfeil explained that the guidance is for the full year and maintains appropriate conservatism for Q4, though the outlook remains positive. He reiterated the company's belief that it can be a mid-to-high single-digit grower long-term but declined to provide specific 2025 guidance. President & CEO Dan Scavilla added that strong competitive recruiting and product launches are building the platform for future growth.

Matthew O'Brien asked about the pace of iDose physician training now that the full sales force is engaged and whether a significant top-line acceleration in 2025 is a reasonable expectation. He also requested an update on FDA discussions regarding iDose reimplantation.

Answer

President and COO Joseph Gilliam noted a consistent trend of new doctor training since the J-code became effective and suggested that accelerating U.S. glaucoma growth bodes well for 2025. Chairman and CEO Thomas Burns reported that dialogue with the FDA on reimplantation has re-engaged, but the company is not dependent on it, highlighting the iDose TREX trial as a parallel strategy.

Matthew O'Brien asked why, given the significant capital expenditures in 2023 and 2024, the implied incremental revenue for 2025 isn't projected to be even higher.

Answer

Executive J. Koning acknowledged that the company's asset base, following the heavy investment in 2024, does support a level of revenue growth potentially higher than what is currently implied. He explained that the company invested ahead of the curve to be prepared for a higher revenue ramp and that the combined 2024 and planned 2025 investment aligns with their historical model of capital needed to drive growth, suggesting the assets are in place for continued significant expansion.

An analyst on behalf of Matthew O'Brien from Piper Sandler asked for details on the specific drivers of strength in the EMEA region and for an update on the competitive landscape in China, including any pricing pressure from the SMILE procedure.

Answer

Tom Frinzi, Chair, President and CEO, credited the strong EMEA performance to distributor markets in the Middle East as well as direct markets like the U.K., Spain, and Germany, driven by a targeted customer initiative called 'Autobahn 50.' On China competition, he stated that while new entrants are expected in 2025, STAAR is well-positioned with its superior Collamer material and toric lenses. He acknowledged price compression on the laser vision side but asserted that EVO ICL maintains a justified premium of $1,500-$2,000 per eye.

Matthew O'Brien from Piper Sandler pressed for more reassurance regarding the AVANT GUARD trial pause, asking if there was a specific safety signal or if the issue was unique to the high-risk, drug-naive patient population.

Answer

CMO Dr. Ken Stein reiterated that he could not share details from an ongoing trial but stressed the company's high confidence in the FARAPULSE system's safety. He pointed to the extensive commercial use in over 125,000 patients and large body of published clinical data as the foundation for this confidence. CEO Michael Mahoney added that they expect to resume the trial soon.