Suraj Kalia

Suraj Kalia with Oppenheimer asked about the anticipated impact of the CREST-2 trial on LeMaitre Vascular's carotid revascularization and carotid artery stenting business and how this has been factored into the company's guidance. He also inquired if the company could provide a breakdown of price versus volume contributions within various product categories for the last quarter.

Answer

President Dave Roberts explained that despite the CREST-2 trial, LeMaitre Vascular had a record quarter for its carotid shunt business, noting that 15% of worldwide sales are from carotid procedures (shunts and patches), with 80% of shunt units sold outside the U.S. He highlighted the company's geographic diversification as a strength and pointed out that CREST-2 had exclusion criteria for stenting that were not applied to carotid endarterectomy, making it a somewhat "apples and oranges" comparison. Dave Roberts concluded that the carotid shunt business is transitioning to an OUS business and is expected to remain resilient. CEO George LeMaitre declined to break down price versus volume contributions by specific categories for simplicity.

Suraj Kalia of Oppenheimer & Co. Inc. questioned how LeMaitre strategically prioritizes price increases versus volume across its product portfolio in the current tariff environment and asked about the current rate of sales force churn.

Answer

Chairman & CEO George LeMaitre explained that pricing power is largely driven by market position, following a 'number one or number two' strategy in niche markets. He also noted that expanding into 'off the beaten track' markets provides pricing advantages. He stated that the current sales force turnover rate is 12%, which he characterized as normal.

On behalf of Suraj Kalia of Oppenheimer & Company, Seamus asked about the potential impact of tariffs, whether faster-than-expected MDR CE mark approvals could provide upside to guidance, and the company's M&A strategy regarding the geographic location of a target's regulatory approvals.

Answer

President David Roberts stated that the impact from tariffs is expected to be minimal as most materials are sourced in the U.S. and China represents less than 1% of sales. CEO George LeMaitre clarified that upcoming MDR approvals are mostly re-certifications and thus offer no revenue upside, with Artegraft being the exception. On M&A, Roberts noted the company is agnostic to where a target's approvals are, given LeMaitre's broad global sales channel.

Suraj Kalia of Oppenheimer & Co. Inc. asked for a geographic breakdown of price versus unit growth, the inventory impact of shifting to direct distribution, and the primary drivers for operating margin expansion into 2025.

Answer

CEO George LeMaitre stated the company could not provide a live geographic breakdown of price vs. unit growth but confirmed that inventory levels are not a constraint on growth. CFO Joseph Pellegrino explained that recent operating margin improvement was driven by moderating OpEx growth and improved gross margins, but he declined to provide specific 2025 guidance.

Suraj Kalia questioned why the change in sales process, specifically ending bulk purchase discounts, was implemented abruptly 'now' rather than being staged, and what specific factors led the board and audit committee to approve this immediate shift. He also asked if a sensitivity analysis was conducted on how existing customer behavior, previously primed by PROCEPT BioRobotics' sales practices, would change almost instantaneously.

Answer

President and CEO Larry Wood explained that the full appreciation for how much incentives drove customer stocking behavior became clear deep in Q4. He saw a significant opportunity to improve average selling price (ASP) to $3,500 in 2026, which is critical for long-term profitability and margins. He decided against a gradual phase-out to avoid prolonged headwinds and customer confusion, opting for a clean break to recondition customers to order based on procedural usage. He stated that multiple weeks of data since the policy change show no negative impact on customer behavior, with ordering patterns settling into stable, reliable streams, which he believes benefits the company long-term.

Suraj Kalia questioned the timing and rationale behind the immediate implementation of the new sales process (ending bulk discounts), asking why it wasn't staged, and inquired about the sensitivity analysis performed on existing customer behavior given that past sales practices had 'primed' them for discounts.

Answer

Larry Wood, Chief Executive Officer, explained that the extent of discount-driven stocking behavior became clear deep in Q4, presenting a significant opportunity for ASP improvement ($3,500 for 2026) crucial for long-term profitability. He opted for a decisive change to avoid a prolonged 'headwind' of gradual adjustments and to recondition customers to order based on procedural usage. Mr. Wood stated that after several weeks since the December changes, they have evaluated customer behavior and see no negative impact or change, believing that eliminating incentives leads to stable, reliable ordering patterns and revenue streams, which is more beneficial long-term.

Suraj Kalia of Oppenheimer & Co. Inc. inquired about the ratio of handpieces shipped versus used and asked about the urologist overlap between BPH and prostate cancer specialists for the WATER-four trial.

Answer

EVP & CFO Kevin Waters stated that the differential between shipped and used handpieces has remained consistent, aided by the company's direct sales model. President & CEO Reza Zadno gave a brief response on the WATER-four trial, confirming the company is working with all relevant urologists for the study.

Suraj Kalia asked about the 400 basis points liver share gain in Q4 and how TransMedics plans to navigate competitive dynamics impacting the control arm of the OCS ENHANCE Part B trial.

Answer

President and CEO Waleed Hassanein attributed the liver share gain to OCS liver outcomes and TransMedics' execution excellence. Regarding ENHANCE Part B, he stated they were prepared for competitive dynamics and are confident in their strategy to complete the study with a robust protocol and control arm.

Suraj Kalia asked about the 400 basis point liver share gain in Q4 and safeguards in place for Part B of the OCS ENHANCE trial, given competitive interference in the control arm.

Answer

Waleed Hassanein, President and CEO, attributed liver execution to OCS liver outcomes and TransMedics' clinical leadership. Regarding Part B of OCS ENHANCE, he stated they were prepared for competitive dynamics and are confident in their strategy to complete the study with a robust protocol and control arm.

Suraj Kalia sought clarification on the financial contribution from clinical trials in the 2025 guidance and asked what specific parameters of the next-gen OCS give confidence in achieving superiority in the lung trial.

Answer

CEO Waleed Hassanein clarified that 2025 guidance does not rely on trial contributions due to strong organic growth. He stated confidence in the lung trial's superiority outcome stems from the next-gen platform's demonstrated ability in preclinical tests to significantly reduce lung edema, a primary cause of graft dysfunction.

Suraj Kalia asked how TransMedics overcame the 'external distraction' in January to gain market share and inquired if the company plans to build a dedicated reimbursement team to assist hospitals.

Answer

Executive Waleed Hassanein clarified the issue was a 'nuisance distraction' and that the strong Q1 results reflect the clinical community's unwavering support, with demand continuing to grow. Regarding reimbursement, he explained that TransMedics already has a robust team of internal and external experts and has established a national working group of transplant administrators to share best practices, indicating this support structure is a long-standing part of their strategy.

Suraj Kalia from Oppenheimer & Co. Inc. asked about the scope and independence of the internal investigation into a short report and questioned the basis for management's confidence in achieving continued market share gains in 2025 despite recent controversy.

Answer

CEO Waleed Hassanein affirmed the investigation was independent and exhaustive but declined to comment further on internal board matters. He expressed high confidence in the 2025 outlook, stating that "noise does not drive TransMedics" and that growth is predicated on the significant greenfield opportunity in underpenetrated markets, such as DBD liver and heart transplants.

Suraj Kalia of Oppenheimer & Co. Inc. questioned the apparent disconnect between strong external DCD volume data and TransMedics' results, asking about potential share loss, OUS stocking orders, and if future growth depends on price elasticity.

Answer

CEO Waleed Hassanein refuted any 'shift in gears,' pointing to strong year-over-year growth and denying any market share loss. CFO Stephen Gordon clarified that organ-specific revenue can be skewed by logistics distances, impacting the average selling price per case. Hassanein also dismissed price elasticity as a factor, arguing NRP is more expensive than OCS when fully costed.

Suraj Kalia asked about the integration of the nPulse cardiac catheter with mapping systems like CARTO or EnSite for the IDE study and whether this could yield incremental benefits. He also requested an update on the next-generation nPulse system and inquired if there was any spillover benefit from the nPulse European feasibility study to the NanoClamp surgical ablation program.

Answer

CEO Paul LaViolette confirmed that improved software integration with mapping systems is expected for the nPulse IDE study, potentially enhancing lesion accuracy and reducing application count. He noted that the next-generation nPulse system, designed for integrated regional and focal ablation, is still in development without specific timelines. Mr. LaViolette affirmed that there are synergies and spillover benefits for the nClamp program, citing comprehensive remapping data, the nPulse's 96% procedural success rate, and outstanding safety profiles from both cardiac cohorts, which are being submitted to the FDA on overlapping timelines.

Suraj Kalia inquired about steps being taken to integrate the nPulse system more effectively with mapping technologies like CARTO or EnSite for the IDE study, and whether this could provide incremental benefits. He also asked for an update on the next-generation nPulse system and if there's any spillover benefit from the nPulse EFS data to the NanoClamp-AF surgical clamp program.

Answer

Co-Chair and CEO Paul LaViolette confirmed that improved software integration for nPulse with mapping systems is expected in the IDE study, potentially enhancing accuracy and reducing lesion count. He stated that the next-generation nPulse system, designed for regional and focal ablation without device exchange, is still in the development phase. LaViolette affirmed spillover benefits for the NanoClamp-AF program, citing reinforced confidence in ablation energy potency, outstanding safety data from both cohorts, and synergies in FDA review processes.

Suraj Kalia of Oppenheimer & Co. Inc. inquired about the baseline patient characteristics driving the adoption of nSPFA for thyroid ablation. He also sought confirmation on the study design for the catheter ablation IDE and the expected regulatory label for the surgical AF ablation clamp.

Answer

CEO Paul LaViolette explained that target patients for thyroid ablation are typically younger, symptomatic individuals seeking an alternative to thyroidectomy to avoid losing vital hormone function. He described nSPFA as a minimally invasive, non-thermal option that preserves the thyroid gland. LaViolette confirmed the catheter study would be single-arm and that the surgical clamp is pursuing a specific PMA cardiac indication, not a general soft tissue label.

Suraj Kalia from Oppenheimer & Co. Inc. inquired about the baseline patient characteristics driving the adoption of nSPFA for benign thyroid nodules. He also asked for confirmation on whether the cardiac catheter ablation study would be a single-arm trial and what the specific regulatory label would be for the surgical AF ablation clamp (cardiac vs. soft tissue).

Answer

Paul LaViolette, CEO & Co-Chairman, explained that ideal patients are symptomatic, often younger, and seeking an alternative to a full thyroidectomy due to the undesirable loss of a vital organ. He described nSPFA as a minimally invasive, non-thermal option that preserves thyroid function. LaViolette confirmed the cardiac catheter study is planned as a single-arm trial and that the company is pursuing a specific Class III PMA cardiac indication for the surgical clamp, not a general soft tissue label.

Suraj Kalia requested clarification on the challenges with the 'bridge device' for Zio AT, given its strong growth, and why the shift to cellular for the Zio MCT product caused a delay.

Answer

Quentin Blackford, President and CEO, highlighted Zio AT's strong performance, growing over 50% for the year. He explained that the shift to a new mobile gateway for Zio MCT was prompted by FDA questions regarding cybersecurity with the old gateway. Rather than investing resources to update the old, soon-to-be-obsolete gateway, iRhythm opted to move directly to a new mobile gateway that inherently addresses these concerns, leading to the adjusted timeline.

Suraj Kalia asked about the strong growth of Zio AT (estimated 30%+), and specifically inquired about the challenges with the old bridge device that led to the shift to cellular for Zio MCT and the resulting delay.

Answer

President and CEO Quentin Blackford clarified that Zio AT grew over 50% for the full year 2025. He explained that the delay for next-gen MCT and the shift to a new mobile gateway were due to cybersecurity questions from the FDA. Rather than investing time and resources to update the old gateway for these concerns, the company opted to move directly to a new mobile gateway that inherently addresses them, making it a strategic long-term decision.

Suraj Kalia of Oppenheimer & Co. Inc. asked what is required for iRhythm to accelerate its market share gains in the MCT category (Zio AT) to a level comparable to its dominant position in long-term monitoring, questioning if it's a matter of execution, IDN penetration, or form factor.

Answer

President and CEO Quentin Blackford explained that while the current Zio AT is performing well, achieving full market parity requires the next-generation Zio MCT product, which will be filed this quarter. This new product will feature a smaller form factor, longer wear time, and enhanced software. He also noted that the MCT market has a 'buy and build' segment (about 20%) where clinics purchase devices directly, a model iRhythm does not currently serve but will need to evaluate for future growth.

Suraj Kalia requested a distilled breakdown of growth drivers across several buckets: Zio Monitor vs. Zio AT, legacy channels vs. primary care, and large IDNs vs. non-IDNs.

Answer

CFO Daniel Wilson provided several key metrics. He stated Zio AT growth has significantly outpaced the company average, now making up about 14% of revenue. Primary care now accounts for over one-third of volume, up from the low 20s 18 months ago. The innovative channel for undiagnosed monitoring, which was negligible 18 months ago, now contributes a low single-digit percentage of volume.

Suraj Kalia asked about iRhythm's Zio AT market share, which he estimated at 10% exiting Q4, and the outlook for share gains in 2025. He also inquired about the business model mix between direct service and selling patches for physician billing.

Answer

CEO Quentin Blackford estimated their MCT market share is closer to 11-12% and noted that guidance contemplates a typical 1-2 point annual gain, though Q4 performance was stronger. CFO Daniel Wilson clarified that iRhythm's model is always an end-to-end service; they do not sell devices separately for physicians to bill, which differentiates them from some competitors.

Suraj Kalia from Oppenheimer & Co. Inc. asked if the Zio MCT will still have event trigger thresholds and questioned the strategic choice of pursuing multiparameter sensing instead of more specialized, ECG-based AI diagnostics.

Answer

CEO Quentin Blackford confirmed the Zio MCT will have a potential trigger limit, but its prevalence will be significantly reduced. On strategy, he explained that enriching data for existing cardiologists (e.g., adding oxygen levels) is highly valuable. He also highlighted the opportunity to use the platform for sleep apnea diagnosis and to enable the shift of care from hospital to home, focusing on cost avoidance for health systems.

Suraj Kalia asked Diron Smith for additional clarity on why Integer would not be able to absorb fixed costs in Q1 despite having several months of visibility. He also posed a hypothetical question to Payman Khales about an ENT customer pulling and then ramping up demand, inquiring if this would require a new contract, manufacturing switches, or if spare inventory is kept.

Answer

Diron Smith, Executive Vice President and Chief Financial Officer, explained that lower Q1 sales compared to Q4 2025 mean the same fixed costs, built for higher capacity, must be absorbed by lower revenue, causing pressure. He advised viewing Integer on a rolling four-quarter basis due to inter-quarter variability. Payman Khales, President and Chief Executive Officer, stated that Integer works closely with customers on forecasts, handling demand changes in an orderly fashion. He confirmed that existing long-term contracts (covering ~70% of business) include such provisions, eliminating the need for new contracts for demand fluctuations.

Suraj Kalia asked Daron Smith for additional clarity on why Integer would struggle to absorb fixed costs in Q1, given typical 6-9 months of visibility. He also posed a hypothetical question to Payman Khales about a customer pulling and then ramping back demand for a new product, asking if it would require a new contract, manufacturing switch, or spare inventory.

Answer

Daron Smith, EVP and CFO, explained that lower Q1 sales compared to Q4 2025 mean the same level of fixed costs (built for higher sales) must be absorbed, leading to less fixed cost leverage. He advised looking at Integer on a rolling four-quarter basis due to inter-quarter variability. Payman Khales, President and CEO, clarified that Integer works closely with customers for orderly ramp-downs and ramp-ups, with existing long-term contracts covering such provisions, avoiding the need for new contracts or manufacturing switches for every change.

Suraj Kalia asked for reconciliation between Integer's largely unchanged backlog and the sudden leftward shift in demand for two electrophysiology customers, questioning the role of contractual arrangements. He also tried to connect the dots on the EP side, suggesting the new product bullishness for H2 2026 might be Volt (Boston Scientific) and the demand softness might imply Johnson & Johnson and Medtronic. He further inquired if the $5M-$10M pull-through revenue mentioned in the Q2 call was EP-specific and if softness was already brewing, noting the difficulty in reconciling Integer's commentary with other strong EP market reports.

Answer

Payman Khales, President and CEO-elect, explained that while backlog provides visibility, Integer works flexibly with customers to meet demand, scaling up or down as needed, rather than strictly adhering to contracts. He clarified that the electrophysiology impact is specific to 2026, with 2025 CMD business still expected to grow mid-teens. Khales emphasized Integer's sole-sourced position, ensuring demand is eventually realized. He declined to comment on specific products or customers due to confidentiality. Regarding the Q2 call, Khales stated the $5M-$10M shift involved multiple products, not just EP. He reiterated the overall strength of the EP market and Integer's EP business, which is expected to grow at market rate in 2026 (excluding the two declining products) and return to above-market growth in 2027 after the three-quarter headwind.

Suraj Kalia sought to reconcile Integer's largely unchanged backlog with the sudden demand curve shift from two electrophysiology customers. He also asked if the Q2 call's $5-10 million revenue pull-through was EP-specific and how Integer's EP softness aligns with broader market strength, particularly regarding PFA versus RFA.

Answer

Payman Khales, President and CEO-elect, explained that while backlog provides visibility, Integer works with customers to adjust to demand changes. He reiterated the EP impact is for 2026, not 2025, and CMD growth remains on track for 2025. He clarified the Q2 call's $5-10 million shift involved multiple products, not just EP. He reaffirmed the EP market's strength and stated Integer's EP business (excluding the two declining products) is expected to grow at market rate in 2026, with a return to overall growth in H2 2026.

Suraj Kalia inquired about the ~70% of business under long-term contracts, asking what portion is up for renewal and if contract flexibility is changing. He also asked for details on the ~$700 million backlog, including its duration, whether it's based on contractual pricing, and how it accounts for foreign exchange.

Answer

COO Peyman Khales explained that contracts are multi-year and staggered, so there is a continuous, rolling renewal process. He noted that while contracts define commercial terms, operational forecasts have inherent variability, with the 1-3 month forecast being the tightest. EVP & CFO Diron Smith clarified the ~$700 million backlog consists of firm customer orders with specific SKUs and delivery dates, with the vast majority deliverable in the next two quarters. He confirmed it reflects contractual pricing and has minimal FX exposure as almost all sales are denominated in U.S. dollars.

Suraj Kalia of Oppenheimer & Co. Inc. asked about the mix of electrophysiology (EP) within the Cardio & Vascular (C&V) segment, the drivers of the sequential increase in accounts receivable (AR), and the company's FX buffers.

Answer

CEO Joseph Dziedzic did not confirm a specific mix for EP but highlighted the overall strength of the C&V segment, which grew 17% reported. CFO Diron Smith attributed the higher AR balance to recent acquisitions and the timing of sales within the quarter. He also explained that FX is managed separately from tariffs through a hedging program and its net impact is not material to results.

Suraj Kalia sought a reconciliation of the 6-8% organic growth guidance for 2025, noting his own calculation yielded a lower figure. He also asked for commentary on the manufacturing outlook for transcatheter tricuspid therapies.

Answer

EVP and CFO Diron Smith clarified the organic growth calculation, explaining that it requires adjusting for the ~$29 million year-over-year decline from the Portable Medical product line exit. President and CEO Joseph Dziedzic addressed the tricuspid therapy question by stating that Integer continues to outgrow the broader structural heart market and is well-positioned to support customers as they ramp new programs, but did not provide specific program details.

Suraj Kalia asked for clarification on how a hurricane in the last week of the quarter could cause a 1% organic growth shortfall if orders are steady, and requested details on the structure of new structural heart product agreements.

Answer

Diron Smith, EVP and CFO, explained that while order patterns are generally smooth, some processes like final sterilization can be concentrated, and the 3-day shutdown occurred during this critical final shipping period. Joseph Dziedzic, President and CEO, addressed the agreements broadly, stating that some new product contracts feature tiered pricing based on volume, which aligns costs with production efficiencies as products ramp to full scale, benefiting both Integer and its customers.

Suraj Kalia asked AtriCure to reconcile the dynamics of its U.S. AtriClip business, which appeared flattish for the last three quarters of 2025, considering LeAAPS contribution, MIS drop-off versus open pick-up, and ASP lift from new products. He also questioned what would prevent a competitor (e.g., Eclyptus) from being used prophylactically post-cardiac surgery upon launch, given the time gap until LeAAPS data becomes available.

Answer

Angie Wirick, CFO of AtriCure, attributed variability in appendage management to MIS clipping, which saw a stronger Q3 with PRO-Mini adoption but an overall downward trajectory in 2025 due to hybrid ablation weakness. Open appendage management showed strong growth. She noted LeAAPS contribution was minimal to any single quarter's revenue. The ASP lift from FLEX-Mini adoption was described as 'a couple of points' for open appendage management, driven by customers switching to the lower-profile device. Mike Carrel, President and CEO, emphasized AtriCure's advantages: superior products (safety, efficacy, 10th generation, new product in mid-2027), extensive clinical evidence (21,000+ patients, 100+ peer-reviewed articles, 0.007% safety rate), and ongoing investment in large, randomized controlled trials like LeAAPS and BoxX-NoAF. He believes this combination of best products and best clinical evidence will lead to long-term market leadership, even with competitors entering the market and potentially leveraging AtriCure's established guidelines and trials. He also highlighted AtriCure's field team's expertise.

Suraj Kalia asked for clarification on the dynamics of U.S. AtriClip, reconciling flattish performance over the last three quarters of 2025, specifically regarding MIS drop-off versus open pick-up, LEAPS contribution, and ASP lift from new products. He also asked Mike Carrel what would prevent a competitor's product (Eclyptus) from being used prophylactically post-cardiac surgery upon its potential launch in Q1/Q2 2027, given the time gap until LEAPS data.

Answer

CFO Angie Wirick explained that variability in appendage management is primarily due to MIS clipping, which needs hybrid ablation growth to stabilize. She noted strong growth in open appendage management throughout 2025, with FLEX MINI adoption contributing a couple of points to overall reported revenue growth through pricing. President and CEO Mike Carrel asserted that AtriCure's products are superior due to exceptional safety and efficacy, continuous innovation (next-gen product mid-next year), extensive clinical evidence (21,000+ patients, 100 peer-reviewed articles, 0.007% safety rate), and significant investment in large, randomized controlled trials like LEAPS. He believes the combination of best products and best clinical evidence will lead to long-term market leadership, even with competitors entering the market and potentially growing the overall market. He also highlighted AtriCure's field, clinical, and education teams as second to none.

Suraj Kalia of Oppenheimer & Co. Inc. asked about the differentiation strategy for AtriCure's PFA surgical clamp and requested a volume versus price breakdown for the appendage management business.

Answer

President and CEO Michael Carrel explained the PFA clamp's differentiation will stem from its integration into the successful Encompass platform and its ability to deliver both PFA and RF energy from a single device. CFO Angela Wirick provided a breakdown for open appendage management, stating that of its 30% revenue growth, approximately 20% was driven by unit volume.

Suraj Kalia asked for a timeline on when the MIS business might return to positive growth and questioned whether the LeAAPS trial would provide a defensible, non-replicable competitive advantage.

Answer

CEO Michael H. Carrel projected that the MIS business would likely face pressure for the remainder of the current year, with a potential return to upside next year. He affirmed that the LeAAPS trial is designed to provide a unique stroke reduction label specifically for the AtriClip, which he believes will not have a 'class effect' and will prevent competitors from leveraging the data without conducting their own similar large-scale trials.

Suraj Kalia of Oppenheimer & Co. Inc. requested quantification of the term 'deeper account penetration' and asked for a fundamental explanation of how AtriCure's technology will effectively treat patients who have already failed PFA ablation.

Answer

CFO Angela Wirick pointed to metrics where product growth (e.g., EnCompass at +50%) outpaced new account growth (+20%) as evidence of deeper penetration. CEO Michael H. Carrel explained that AtriCure's epicardial approach with the Convergent procedure addresses the tissue substrate that endocardial-only ablations often miss, providing a durable solution for these difficult-to-treat patients.

Suraj Kalia questioned the specific clinical need for a PFA surgical product, given the existing benefits of Hybrid therapy, and asked about the expected regulatory pathway. He also asked for the net ASP impact from the new cryoSPHERE probes on the pain management business in the quarter.

Answer

CEO Michael H. Carrel acknowledged that the incremental clinical benefit of PFA over existing RF and cryo technologies is still to be determined, but emphasized the strategic importance of offering it as a choice. He suggested the FDA would likely require a PMA pathway for epicardial PFA. CFO Angela Wirick clarified that there was 'almost nothing' in terms of ASP impact from the new probes, as the cryoSPHERE+ is priced the same as the legacy device, meaning the segment's strong growth was driven entirely by volume.

Suraj Kalia inquired about customer preferences in general radiography discussions at RSNA, specifically whether customers are gravitating towards price-sensitive or higher-end products, and what this indicates about macro conditions and consumer sentiment. He also asked about the gross margin composition within the medical device segment and sought additional color on Varex's strategy for China and the market status of photon counting technology.

Answer

President and CEO Sunny Sanyal explained that Varex is regaining radiography market share with new, functionally rich, attractively priced, and India-made detectors, which are best-in-class and appeal to customers in emerging markets for analog-to-digital conversion. He noted strong interest in the combined detector and Nexus software package for new applications and mobile carts. CFO Sam Maheshwari detailed medical device gross margins, stating that complex products like CT and oncology generally yield higher margins, while RAD and dental are lower, with a strategy to improve RAD margins by producing in India. Sanyal addressed China, emphasizing a focus on end-user demand and viewing Chinese OEMs as global partners critical for success in emerging markets, with stable customer relationships and consistent orders. For photon counting, Sanyal reported two OEMs are deep in commercialization, while Varex aims to democratize the technology beyond the high-end market.

Suraj Kalia asked about customer gravitation towards price-sensitive or higher-end products in general radiography, Varex's strategy for planning in China given macro dynamics, the market status of photon counting technology, and the composition within the medical device segment impacting gross margins.

Answer

President and CEO Sunny Sanyal explained that Varex's new low-cost, functionally rich, India-made radiographic detectors are attracting customers for share gain, particularly for analog-to-digital conversion in emerging markets. For China, Sanyal emphasized focusing on end-user demand and supporting Chinese OEMs who are increasingly globalizing, noting stable customer relationships despite macro chatter. On photon counting, he reported two OEMs are deep in commercialization, with Varex aiming to democratize the technology beyond the high-end market. CFO Sam Maheshwari detailed gross margins, stating they are higher in complex medical modalities like CT and oncology, and lower in RAD/dental, with a strategy to improve RAD margins by producing in India. Industrial margins are higher for service business and photon counting compared to hardware shipments.

Suraj Kalia asked about the sustainability of Varex's customer concentration, specifically the top 10 customers accounting for 52% of sales, and requested a split between medical and industrial segments. He also inquired about potential structural shifts in medical and industrial segments for fiscal year 2026, given recent softness in medical and strength in industrial. Finally, Kalia asked about the implications for Varex from potential divestitures or splits of GE and Siemens Healthineers' China businesses.

Answer

President and CEO Sunny Sanyal stated that the top 10 customer concentration (50-55%) is consistent over many years, and a medical/industrial split is not provided for commercial reasons as the vast majority are medical. Sanyal noted that the industrial segment is consistently growing faster than medical, approaching 30% and expected to reach mid-30s. He explained that medical segment volatility is quarter-to-quarter, and non-Chinese OEMs increasingly request shipments from Chinese facilities, complicating China/ex-China consistency. Regarding GE/Siemens, Sanyal indicated no significant implications for Varex as the majority of its China business is with Chinese OEMs, who are also expanding globally.

Suraj Kalia asked about the customer concentration, specifically the top 10 customers accounting for 52% of sales, inquiring about the split between Medical and Industrial segments and the sustainability of this concentration. He also questioned if the recent softness in Medical and strength in Industrial indicates a structural shift and the potential impact of GE and Siemens Healthineers' speculated China business changes on Varex.

Answer

President and CEO Sunny Sanyal explained that the top 10 customer concentration (50-55%) is consistent over many years, with the vast majority being Medical customers, and the split is not disclosed for commercial reasons. He noted Industrial is growing faster, approaching 30% of sales and expected to reach mid-30s, while Medical segment volatility is quarter-to-quarter. Sanyal also stated that Varex's China business primarily relies on Chinese OEMs, so the speculated changes by GE and Siemens Healthineers are not expected to have significant implications.

Suraj Kalia of Oppenheimer & Co. Inc. requested a breakdown of the $35 million in Q1 China revenue, specifically the local-for-local percentage and the Medical versus Industrial split. He also asked about the sensitivity of the company's FY25 forecast to potential Chinese stimulus.

Answer

CFO Shubham Maheshwari explained that nearly all China revenue is from the Medical segment, primarily tubes, and estimated the local-for-local versus export mix is currently around 50-50, though it trends toward local over time. CEO Sunny Sanyal stated that the company's forecast does not include any impact from a potential stimulus, as there is no clarity on it. Shubham Maheshwari also noted that Q1 is seasonally strong for China and that the 18% revenue contribution was elevated due to destocking impacts elsewhere.

Suraj Kalia of Oppenheimer & Co. Inc. inquired about Varex's outlook on the China stimulus, its strategy for gaining market share in photon counting, and the key drivers for future gross margin expansion.

Answer

CEO Sunny Sanyal stated that Varex has not yet seen a measurable impact from the China stimulus and has not factored it into projections. He explained that differentiation in photon counting will come from hardware speed, resolution, and software expertise. CFO Shubham Maheshwari added that while Medical segment margins have improved from company initiatives, overall margins are weighed down by a higher mix of lower-margin industrial linear accelerators. A return to mid-30s gross margins depends on higher sales volume and the end of customer destocking.

Suraj Kalia asked about the structural heart segment, specifically the U.S. total addressable market (TAM) for mitral and tricuspid therapies, and the factors influencing its realization, such as SGLT2 inhibitors and cath lab capacity.

Answer

Robert Ford, Chairman and CEO, emphasized the significant opportunity in mitral and tricuspid therapies. For tricuspid, he stressed the need for continued investment in data to strengthen referral pathways, with repair currently preferred due to safety. For MitraClip, a trial for low and intermediate-risk patients is underway. Ford highlighted Abbott's position as the number two player in structural heart, driven by heavy investment and a comprehensive portfolio including MitraClip, Triclip, NAVTOR, and Amulet. He cited multiple catalysts for sustained double-digit growth, such as label expansions, new generation products, guideline changes, the Triclip Japan launch, and bolt-on M&A (AI imaging software). Ford expressed high confidence in the pipeline, particularly the mitral replacement valve, which has received 'spectacular' feedback and has the potential to fulfill the promise of mitral being as significant as TAVR.

Suraj Kalia focused on structural heart, specifically the mitral and tricuspid U.S. Total Addressable Market (TAM), asking about the puts and takes for realizing this TAM given landscape changes like SGLT2 inhibitors and cath lab capacity.

Answer

Chairman and CEO Robert Ford emphasized the need for continued investment in clinical data for tricuspid (repair preferred for safety) and MitraClip (low/intermediate risk trial). He highlighted Abbott's strong #2 position in structural heart, driven by a complete portfolio (MitraClip, Triclip, NAVATOR, Amulet) and multiple catalysts including label expansions, new product launches (fifth-gen MitraClip/Triclip), guideline changes, and bolt-on M&A (AI imaging software). He expressed high optimism for the mitral replacement valve pipeline, believing it has the potential to fulfill the promise of the mitral market.

Suraj Kalia from Oppenheimer asked about the rationale for stopping enrollment in the ACCESS study for CCC patients and inquired about the strategy for patient outreach, specifically how Nexeo will package and communicate GENEO's unique product attributes.

Answer

CEO Olivier Talman explained that ACCESS enrollment was halted because a sufficient number of patients had been enrolled to achieve statistical power, which accelerates the timeline for a potential label expansion. For patient outreach, he emphasized leveraging strong clinical data, highlighting the benefit of all-night protection for sleep physicians, and executing a focused, scalable launch with territory managers targeting key accounts.

Suraj Kalia asked about the strategy for penetrating top implant sites that may have existing competitor inventory, the geographic focus of the U.S. sales force, and how the company's Direct-To-Consumer (DTC) marketing approach will differ from its competitor.

Answer

CEO Olivier Taelman explained that competitor inventory is not a barrier due to high turnover at key sites and that the launch strategy focuses on patient identification rather than stocking shelves. He noted the sales force was hired based on 'heat maps' of high-volume centers. Regarding DTC, Taelman stated the approach will be highly targeted around sleep centers, avoiding broad, expensive campaigns like Super Bowl commercials.

Suraj Kalia asked about the key competitive advantage or 'hook' for Genio versus Inspire, based on learnings from Germany, and requested updates on the timing of the DREAM study publication and the enrollment status of the ACCCESS trial.

Answer

CEO Olivier Taelman explained that learnings from Germany indicate the initial hook is offering a less invasive, single-incision alternative to a pacemaker-like device. This is followed by differentiators like bilateral stimulation and high patient compliance. He added that the DREAM study publication is under review and expected in the coming months, while ACCCESS trial enrollment is anticipated to complete by mid-2025.

Suraj Kalia inquired about the key learnings from Nyxoah's commercial experience in Germany, whether those lessons are applicable to the upcoming U.S. launch, and if the German market met expectations. He also asked for an update on the ACCESS trial and the nature of the initial U.S. launch sites.

Answer

CEO Olivier Taelman explained that the German launch successfully proved Nyxoah could break a monopoly and expand the hypoglossal nerve stimulation market, achieving over 30% market share in some top accounts. He noted these learnings provide confidence for the U.S. launch, which will target high-volume Tier 1 implanters. Taelman also stated that the ACCESS trial is progressing, with plans to close implants by the end of 2024, and that bilateral stimulation is a key differentiator for CCC patients.

Suraj Kalia asked for details on nelitolimod's pharmacokinetic (PK) profile from the 12-patient study to gauge TriSalus's leverage with partners. He also requested more granularity on the impressive 42% revenue growth for TriNav, asking about its breadth and depth across accounts.

Answer

CEO Mary Szela explained that nelitolimod has shown long-term effects and that a key point of interest for pharma partners is its ability to help checkpoint-refractory patients. Regarding the 42% growth, Szela highlighted a strategic shift from simply opening new accounts to now focusing on driving deeper utilization within existing high-volume hospitals, a momentum shift aided by the new reimbursement code.

Seamus, on behalf of Suraj Kalia of Oppenheimer & Company, sought to understand the baseline utilization of TriNav for mapping in Medicare patients prior to the new code and whether this new reimbursement represents upside to guidance. He also inquired about other DELIVER trials and enrollment timelines.

Answer

CEO Mary Szela stated the company believes very few, if any, Medicare patients were using TriNav for mapping before the new code due to unfavorable economics. She confirmed the potential revenue from this was not included in the 2025 guidance and therefore represents upside. Regarding clinical trials, Medical Director Dr. Richard Marshall provided an update on the PROTECT registry, noting enrollment is progressing well. Szela added that details on other new clinical applications would be announced later in the year.

Suraj Kalia of Oppenheimer & Co. Inc. requested details on the assumptions for the FY25 guidance, focusing on device utilization rates and the mix between new and existing accounts. He also asked for clarification on the treatment paradigm for multinodular goiters and how TriNav's approach compares to the current standard of care, such as surgery.

Answer

Chief Financial Officer Sean Murphy stated that the 2025 forecast assumes an increase in same-store utilization to an average of 17.5 units per account, with the remainder of the growth driven by adding 50 new accounts and a ~$5 million contribution from the TriNav Large launch. President and CEO Mary Szela explained that for multinodular goiters, TriNav targets patients with extensive nodules who are typically referred for invasive surgery, offering a minimally invasive alternative that reduces risks and preserves thyroid function.

Suraj Kalia asked for directional color on the implied growth for On-X and stent grafts within the full-year guidance. He also questioned how the NEXUS 30-day data compared to internal expectations and what the key one-year milestones are for the device.

Answer

Executive James Mackin expressed that the NEXUS 30-day data was extremely positive, with surgeons impressed by the low stroke and renal complication rates, reinforcing confidence in a potential H2 2026 approval. CFO Lance Berry detailed that, excluding AMDS, stent grafts are expected to grow mid-teens and On-X double-digits for the full year. He added that AMDS is expected to add 1-2 percentage points to total company growth and that On-X has potential upside from recent favorable clinical data.

Suraj Kalia of Oppenheimer & Company questioned the 'missionary work' needed to drive On-X adoption following new data, the clinical community's reaction to AMDS 1-year data, and the expected OUS contribution for FY25.

Answer

CEO James Mackin highlighted that recent data showing a mortality benefit for mechanical valves in patients under 60 could double the On-X market, with plans to target referring cardiologists. He described the physician buzz around AMDS as 'extremely high.' Regarding OUS, Mackin noted a 50/50 revenue split, while CFO Lance Berry added that a natural hedge mitigates most FX impact on EBITDA.

Suraj Kalia asked about potential alternative growth drivers for SynerGraft beyond donor volumes, inquired about the risk of late migration with the NEXUS trial device, and sought clarity on the company's strategy for its convertible debt.

Answer

CEO James Mackin stated that while SynerGraft growth is constrained by donor supply, the company is actively working on improving yields and has other initiatives planned. On the NEXUS device, he emphasized it is specifically designed for the aortic arch and, to his knowledge, has shown no migration issues. CFO Lance Berry addressed the convertible debt, explaining that the company has flexibility due to its delayed draw term loan and is taking a 'wait-and-see' approach, advising analysts to model conservatively.

Suraj Kalia asked for a breakdown of price versus volume for U.S. product sales and questioned whether the major hospital win was a competitive displacement or a de novo adoption.

Answer

CEO Joseph DeVivo clarified the hospital win was a 'choice of a winner' for a new POCUS program, not a displacement of an existing one, though Butterfly's software does displace older data aggregation tools. CFO Heather Getz stated that for U.S. product sales, the growth split was approximately 80% from volume and 20% from price, with price having a larger impact internationally.

Suraj Kalia of Oppenheimer & Co. Inc. asked about the mix of existing versus new customer growth ('same-store new store' dynamic) within the FY25 guidance as iQ3 adoption increases. He also requested objective evidence to support the claim that Butterfly's image quality is now 'as good as anyone's'.

Answer

Joseph DeVivo, Chairman and CEO, explained that growth is driven by both new business from channels like e-commerce and unlocking new hospital departments (ICU, ER), as well as upgrades from existing customers. Regarding image quality, DeVivo clarified the comparison is against other handheld devices. He cited strong iQ3 sales growth and a pre-launch internal study where a majority of 470 blinded physicians preferred the iQ3's image as evidence that Butterfly has closed the competitive gap and is now firmly in the conversation with top competitors.

Suraj Kalia asked about the new P5 chip, questioning the technical feasibility of achieving harmonics without significant heat generation, and inquired about the implied flat sequential guidance for Q4 despite management's optimistic commentary.

Answer

Joseph DeVivo, Chairman and CEO, explained that the P5 chip achieves harmonics by increasing mechanical pressure via MEMS technology, which does not generate the same heat as traditional piezoelectric crystals. He noted this breakthrough paves the way for Butterfly to enter the hospital cart market. Regarding guidance, both DeVivo and Heather Getz, CFO and COO, clarified that they focus on strong year-over-year growth (projected at 25% for Q4) rather than sequential performance, and confirmed that their forecast includes a degree of conservatism.

Suraj Kalia of Oppenheimer asked for clarification on how Outset Medical plans to achieve a greater than 50% reduction in cash outlay for 2025 without impacting the commercial organization, given the capital-intensive nature of the business.

Answer

CFO Nabeel Ahmed detailed the drivers of the reduced cash burn. He cited expected revenue growth, gross margin expansion, a ~$30 million reduction in annual OpEx to ~$90 million, efforts to lower inventory levels, and a significant decrease in cash interest expense following the reduction of debt from $200 million to $100 million.

Suraj Kalia of Oppenheimer & Co. asked for a characterization of the respective growth rates within the acute, subacute, and home market segments.

Answer

CFO Nabeel Ahmed noted that the home business has consistently contributed roughly 20% of total revenues. CEO Leslie Trigg provided additional color, highlighting strong growth channels in the home market through mid-sized dialysis organizations and an emerging opportunity with skilled nursing facilities (SNFs), which she expects to contribute significantly in 2025.

Suraj Kalia asked for a more precise definition and quantification of "patient leakage" from the sales funnel and inquired about the potential operating leverage from reducing it. He also requested an update on the status of the qui tam lawsuit.

Answer

CEO Sheri Dodd defined patient leakage as patients dropping out of the order process due to its protracted and complex nature, citing examples like repetitive therapy documentation requirements or insurance delays. She explained that streamlining this process is key to converting more referrals. Regarding the qui tam lawsuit, Dodd stated it remains an ongoing legal matter and referred to public filings. She confirmed the government has not chosen to intervene at this time but can do so later, and the company will defend the matter as it proceeds.

Suraj Kalia asked for an estimate of how many of the approximately 30,000 patients implanted in fiscal year 2024 had not tried CPAP therapy first, in the context of the DOJ investigation.

Answer

Chairman and CEO Tim Herbert stated that while he did not have a specific number, he believes it would be 'very few.' He stressed that the requirement for patients to have tried and failed CPAP therapy is a strict standard that the company, physicians, and all payers, including government entities, take very seriously.

Suraj Kalia of Oppenheimer & Co. asked for a reconciliation between the relatively flat U.S. utilization rate over the last several quarters and management's commentary about facing capacity constraints in Q4.

Answer

CEO Tim Herbert reiterated that growing utilization remains a primary focus. He explained that the capacity constraint issue is particularly acute in the fourth quarter, which historically sees very high patient demand. This seasonal surge pushes up against available OR time, making it difficult to absorb disruptions like hurricanes and reschedule all procedures, even if average utilization has been stable in prior quarters.

Asked for context on the clinical improvements seen with AdaptiveAI (e.g., 20% reduction in office visits) compared to competitor platforms, and questioned the robustness of the underlying data. Also asked what percentage of patients use the proprietary HF10 therapy versus other waveforms.

Answer

Executives clarified the clinical comparisons were against their own prior-generation devices (HFX iQ and Omnia), not competitors, as they are still in a limited launch. They affirmed that over 95% of their patients exclusively use the HF10 therapy, and that in Q3, the IQ product family represented about 68% of their product mix.

Suraj Kalia asked how ResMed is positioned to handle a potentially more price-sensitive environment, particularly if its main competitor returns to the U.S. device market.

Answer

CEO Michael Farrell stated that ResMed already competes with this player in nearly all of its 140 markets and is winning. He expressed confidence in their ability to compete upon a U.S. return, emphasizing that ResMed's sustainable advantage lies in its superior technology and comprehensive digital health ecosystem, not just price.