Russell Yuen

Russell Yuen from William Blair asked for clarification on the underlying assumptions for Trupanion's 2026 guidance, specifically regarding gross adds, commercial strategy, and the balance between price and volume contributions. He also inquired about lead conversion success, particularly with breeders, and any changes in the demographic or economic quality of lead inbounds due to macro pressures.

Answer

CFO Fawwad Qureshi stated that pricing remains the dominant revenue growth contributor for 2026, though its role is expected to be lower than in 2025, while pet count contribution will be higher. He noted stable loss ratio assumptions, diligent expense management leading to fixed expense reduction, and overall variable expense efficiencies. CEO and President Margi Tooth highlighted the veterinary channel as the primary acquisition strategy, with encouraging results across all channels. She mentioned speaking to different pet parents and optimizing the existing product, with plans for a new product offering within the next 36 months to broaden market reach.

Russell Yuen from William Blair asked for clarification on the underlying assumptions for Trupanion's 2026 guidance, specifically regarding gross adds, commercial strategy, and the expected contributions of price versus volume. He also inquired about lead conversion success, particularly with breeders, and any demographic or economic shifts in lead quality due to macro pressures.

Answer

CFO Fawwad Qureshi detailed that pricing remains the dominant revenue contributor for 2026, though its role is expected to be lower than in 2025, with pet count contribution increasing. He also highlighted continued efficiencies in fixed and variable spending. CEO and President Margi Tooth noted encouraging results across all channels, with the vet channel remaining primary, and mentioned plans to optimize existing offerings and launch a new product to reach a broader consumer base.

Russell Yuen from William Blair sought to clarify if the ARVIS impact on the Recon segment was due to lower ARVIS sales or a resulting impact on implant procedures. He also asked about management's confidence in sustaining Recon's growth and the key drivers for future growth.

Answer

CFO Ben Berry explained the ARVIS impact was twofold: lower year-over-year capital sales of the current device and customers delaying purchases while awaiting the next-generation system. CEO Damien McDonald expressed confidence in sustaining growth through the expanded Lima portfolio, a strong new product cadence including Nebula hip and ARG shoulder, and disciplined commercial execution.

Russell Yuen, on for Brandon Vazquez, asked about the current pricing environment and the potential for price increases, as well as the durability of the strong international growth in the Recon segment.

Answer

CEO Matthew Trerotola described P&R pricing as 'flattish' while noting the Recon market has seen a 'downward price environment,' though this is offset by a richer product mix. He characterized international growth as 'tremendous' and above-market, driven by a strong commercial channel and product portfolio, expressing confidence in its durability as cross-selling opportunities are still in the early stages.

Russell Yuen, on for Brandon Vasquez, requested an update on Envista's tariff mitigation strategies and timelines. He also asked about the drivers behind the Challenger implant brand's return to growth and for commentary on the overall implant market.

Answer

CFO Eric Hammes explained that the company expects to offset $15-20 million in H2 tariff costs through supply chain actions, cost reductions like G&A, and price. CEO Paul Keel clarified that the Challenger brand's return to growth in Q2 was expected, attributing the Q1 dip to fewer billing days rather than a fundamental change in the business.

Russell Yuen of William Blair, on behalf of Brandon Vasquez, asked for feedback on the iTero Lumina scanner launch amid a weak consumer environment and low willingness among dentists to purchase capital equipment.

Answer

President & CEO Joe Hogan acknowledged that Align missed its sales goals for full Lumina systems but noted the segment still grew nearly 14%. He explained that the majority of sales were wand upgrades for existing iTero 5D+ systems, reflecting capital spending caution from doctors. Despite this, he stated the company felt good about the product's overall uptake and market excitement.