Travis Steed

Travis Steed requested a breakdown of the various puts and takes in the quarter (order timing, recall, ERP, SKU exits) to determine the underlying growth rate and asked about the growth trajectory beyond 2025.

Answer

CEO Bryan Hanson stated that the reported 2.8% organic growth is a good representation of the underlying performance, as the various positive and negative factors largely offset each other. Looking forward, Hanson confirmed expectations for continued growth acceleration driven by commercial execution and innovation, while also noting that the headwind from SKU rationalization is expected to increase from 50 basis points in 2025 to about 100 basis points next year.

Travis Steed from Bank of America asked for details on the mitigation efforts offsetting the $0.35-$0.45 EPS tariff headwind and inquired about the portion of the tariff impact tied to the Purification & Filtration (P&F) business.

Answer

CFO Wayde McMillan stated that the tariff impact is being offset by strong business performance, favorable FX, and mitigation actions like inventory optimization and selective pricing. He declined to break out the P&F impact, noting the company guides as a whole until the divestiture closes. He guided for full-year operating margins to be at the low end of the 20-21% range, with H2 margins falling below 20% due to tariff pressure.

Travis Steed questioned the 2025 operating margin guidance of 20-21%, asking for the puts and takes. He also asked if the P&F divestiture was the last major portfolio move and about the conservatism in the 'EPS neutral' guidance for the deal.

Answer

CFO Wayde McMillan explained the margin guide builds from the Q4 run-rate of 20.4% and incorporates a 50 bps headwind from the 3M supply agreement. He clarified the 'EPS neutral' impact is due to the deal's late-year closing, which limits the period of interest savings. CEO Bryan Hanson stated that portfolio optimization is a perpetual process, though any future moves must consider tax implications and TSA complexities.

Travis Steed of BofA Securities questioned the Q4 EPS guidance of $1.22 to $1.37, its implications for 2025 forecasts, and the company's strategy for managing dilution from potential portfolio optimization.

Answer

CFO Wayde McMillan explained the Q4 EPS decline is due to the reversal of onetime Q3 gross margin benefits, increased stand-up costs, and FX headwinds. He stated that 2025 guidance is not yet available but will be pressured by the annualization of post-spin costs, including supply agreement markups and functional expenses, though the "Solventum way" restructuring could provide a tailwind. CEO Bryan Hanson added that any portfolio optimization decisions would be made with shareholder value in mind, considering financial implications like dilution.

Travis Steed inquired about the drivers behind the Q4 EPS guidance, which implies a sequential decline, and its potential implications for 2025 earnings forecasts. He also asked for the company's strategy on portfolio management and mitigating any potential dilution from divestitures.

Answer

CFO Wayde McMillan explained the Q4 EPS decline is due to the partial reversal of onetime Q3 gross margin benefits, increased stand-up and growth investment costs, and an expected FX headwind. For 2025, he noted that while guidance is not yet set, the year will be pressured by the annualization of post-spin costs, including the 3M supply agreement markup and functional expenses, though the 'Solventum way' restructuring could provide a tailwind. CEO Bryan Hanson added that any portfolio optimization decisions would be made with shareholder value in mind, considering the financial implications to offset dilution.

Travis Steed inquired about Insulet's outlook for 2026, considering factors like Libre integration and accelerating Type 2 adoption, and whether record new starts can continue. He also asked for elaboration on the new CFO's guidance practices, specifically regarding a balanced outlook and acknowledging risks.

Answer

Ashley McEvoy, President and CEO, expressed confidence in continued top-tier growth and improved profitability for 2026, with specific guidance to be provided on the Q4 call. Flavia Pease, CFO, explained her guidance philosophy aims for a balanced view, acknowledging risks, uncertainties, and potential upsides, and mentioned a potential evolution of key performance indicators (KPIs) for 2026.

Travis Steed inquired about the outlook for 2026, specifically regarding the potential for continued record new patient starts with Libre integration and accelerating Type 2 adoption. He also asked Flavia Pease to elaborate on her philosophy for refining guidance practices to reflect a balanced outlook, including risks and opportunities.

Answer

Ashley McEvoy (President and CEO) expressed confidence in delivering continued top-tier growth and improved profitability in 2026, with specific guidance to be provided on the Q4 call. Flavia Pease (CFO) stated her goal is to provide guidance with a high degree of confidence, reflecting a balanced outlook that acknowledges potential risks, uncertainties, and upside opportunities, and mentioned potentially evolving key performance indicators (KPIs) for 2026.

Travis Steed asked about the factors driving the acceleration in Type 2 new patient starts, the sustainability of this trend, and the overall outlook for the Type 2 market opportunity.

Answer

Ashley McEvoy, Director, President & CEO, explained that the acceleration is driven by a multi-faceted approach. This includes leveraging strong clinical evidence from the SECURE-T2D trial, utilizing superior market access through the pharmacy channel with low co-pays, expanding the field force's capabilities to sell the science, and successfully sourcing new patients from both MDI and competitive pump users.

Travis Steed from Bank of America asked about the factors driving the acceleration in Type 2 new patient starts and sought an update on the overall opportunity in the Type 2 diabetes market.

Answer

President and CEO Ashley McEvoy emphasized the large total addressable market and Insulet's first-mover advantage. She identified key growth drivers as: 1) compelling clinical evidence demonstrating A1C reduction, 2) superior market access via the pharmacy channel with low co-pays, 3) an expanding and effective field sales force, and 4) success in converting patients from both MDI and competitive pumps.

Travis Steed asked new CEO Ashley McEvoy about her excitement for the role, initial learnings, and her strategic vision for globalizing the business and achieving future revenue milestones, as well as her perspective on long-term margin targets compared to her predecessor.

Answer

President and CEO Ashley McEvoy expressed her passion for the diabetes space and Insulet's unique position combining consumer health and med-tech. She stated that the company's successful strategy remains intact. Regarding financials, she highlighted the company's rapid growth and confirmed a commitment to continued year-over-year operating margin improvement.

Travis Steed from Bank of America questioned the Q1 U.S. guidance, noting that the adjusted growth rate of mid-to-high teens (excluding prior-year stocking impacts) seemed potentially conservative.

Answer

CFO and Treasurer Ana Maria Chadwick confirmed the normalized growth calculation. She explained that the guidance accounts for typical seasonality between Q4 and Q1 and is consistent with the full-year outlook of 16% to 20%. Chadwick reiterated that the company's guidance philosophy has not changed.

Travis Steed asked for a high-level perspective on the 2025 new patient start opportunity with the Type 2 launch and for commentary on the competitive landscape, referencing remarks from a competitor.

Answer

CFO and Treasurer Ana Maria Chadwick noted that the full revenue impact of 2024's new customer starts will be seen in 2025 due to the annuity model. President and CEO Jim Hollingshead addressed competition by stating Insulet has industry-leading retention and has seen an uptick in conversions from a specific competitor, while emphasizing Insulet's primary focus remains on converting MDI users.

Travis Steed asked about the conservatism embedded in BD's new fiscal year 2026 guidance, particularly regarding confidence in delivering on initial EPS and margin targets, and sought clarification on the Q1 guide's implications for the full year.

Answer

Chairman, CEO, and President Tom Polen explained that the guidance takes a prudent approach, clearing the table on macro dynamics like vaccine patterns, Alaris success, and China's volume-based procurement (VBP), without building in any macro improvements. He noted Q1 reflects full-year headwinds, tough biosciences comparisons, and medical essentials timing, with disproportionate vaccine impact, expecting growth to step up in Q2 and Q3 without relying on back-half heroics.

Travis Steed inquired about the conservatism embedded in the new BD guidance, particularly regarding confidence in delivering on initial EPS and margin targets, and sought clarification on the Q1 guide versus the full-year phasing.

Answer

Tom Polen, Chairman, CEO, and President of BD, and Chris DelOrefice, Executive Vice President and Chief Financial Officer, explained that the guidance takes a prudent approach by incorporating updated views on macro dynamics, including vaccine patterns, Alaris performance, and China's VBP impact, without assuming macro improvements. They highlighted BD Excellence as a driver for continued margin expansion. For Q1, they noted it reflects full-year headwinds, disproportionate vaccine impact, and tough comps, with growth expected to step up in Q2 and Q3 without relying on back-half heroics.

Travis Steed from Bank of America posed a high-level question about the 'RemainCo' business's growth outlook relative to its 5.5%+ long-term target and its post-separation capital deployment strategy. He also asked for other drivers of the Q4 EPS change besides investments.

Answer

Tom Polen, Chairman, CEO & President, discussed the strategy of reinvesting gains from BD Excellence into commercial initiatives and new product launches to build momentum. He also highlighted ongoing tariff mitigation efforts. Christopher DelOrefice, EVP & CFO, clarified that the Q4 EPS guidance change is largely driven by this planned investment profile to fuel growth, emphasizing the strength of the nearly 9.5% full-year EPS growth guidance.

Travis Steed asked a high-level question about guidance philosophy and execution, seeking confidence in the back-half growth acceleration after a guidance cut. He also followed up on the planned Life Sciences separation, questioning if macro changes or valuations have affected the process.

Answer

Chairman, CEO and President Thomas Polen attributed the guidance change to unforeseen macro shifts, particularly a Q2 change in NIH grant funding policy and a proactive adjustment for China's environment. CFO Christopher DelOrefice emphasized that core MedTech remains strong and highlighted consistent earnings execution, with the company absorbing headwinds to deliver 8% EPS growth. Regarding the separation, Polen confirmed the process remains on schedule with strong interest, and an announcement on the transaction's form is still expected in the summer.

Travis Steed asked about the timing and rationale for separating the Biosciences and Diagnostic Solutions business, the potential form of the transaction (spin vs. sell), and the underlying growth expectations for Q2 after accounting for specific headwinds.

Answer

Chairman, CEO and President Tom Polen explained the separation is a natural next step in the BD 2025 strategy to unlock value, positioning 'New BD' as a pure-play med-tech leader and allowing the life science business to thrive independently. He stated the final form will be what best maximizes shareholder value. EVP and CFO Chris DelOrefice clarified the Q2 outlook, noting that excluding a one-time licensing headwind, growth is at the midpoint of the annual guidance, with the core business operating at over 5% growth.

Travis Steed pressed for more detail on the fiscal 2025 revenue phasing, questioning why Q1 growth is expected to be below the full-year guide despite a strong Alaris tailwind, and asked for confidence in the ability to accelerate growth against tougher comps later in the year.

Answer

EVP and CFO Chris DelOrefice clarified that the phasing reflects tough prior-year comparisons in Q1, particularly in the bioscience and pharm systems businesses which were still growing at mid-single digits in Q1 of FY24. He emphasized that the earnings profile is very balanced, with strong year-over-year margin improvement expected from the start of the fiscal year.

Travis Steed followed up on the Inari Medical integration process and sales force, asking if the current quarter's double-digit growth represents a low point and for comments on store and PE data. He also asked for more details on the Siemens partnership in neurovascular robotics, including goals and timing.

Answer

Kevin Lobo (Chair and CEO, Stryker) explained that while Q3 was strong, the 'burn-through' of prior stocking would continue to impact Q4 and Q1, after which growth is expected to accelerate without that drag. Jason Beach (VP of Finance and Investor Relations, Stryker) stated that no further details could be disclosed regarding the Siemens partnership at this time.

Travis Steed followed up on Inari Medical, asking about the integration process, sales force productivity, whether Q3 growth was a low point, and comments on recent DVT/PE data. He also inquired about the goals and timing of the Siemens neurovascular partnership.

Answer

Kevin Lobo, Chair and Chief Executive Officer, noted rapid sales force hiring and good Q3 performance for Inari, expecting double-digit growth in Q4 and Q1, with the drag from destocking ending after Q1. Jason Beach, Vice President of Finance and Investor Relations, stated no further details on the Siemens partnership would be disclosed at this time.

Travis Steed of Bank of America asked about Inari Medical's performance, including destocking and sales rep transitions, and the confidence in its future growth. He also inquired about the potential impact of Medicaid cuts on procedures and the reason for a deceleration in the knee business.

Answer

Chair & CEO Kevin Lobo explained that Stryker took its 'medicine early' with Inari, addressing destocking and salesforce non-competes, but underlying procedural demand remains in the double digits. VP of Finance & IR Jason Beach noted that Medicaid procedures are an immaterial amount for Stryker and that the knee market remains healthy, attributing the quarterly fluctuation to timing and expecting a mid-single-digit market growth.

Travis Steed asked a multi-part question about tariffs, seeking details on currency offsets, potential impacts from policy changes, the 2026 outlook, and the status of industry exemption discussions with AdvaMed.

Answer

CFO Preston Wells stated the $200 million tariff estimate is based only on current policies and declined to speculate on 2026 or future policy changes. He confirmed that while AdvaMed discussions are ongoing, there is currently no blanket exemption for medical devices, and Stryker is planning accordingly with its mitigation efforts.

Travis Steed questioned Stryker's M&A priorities following the Inari deal, asking if it would be a period of digestion or continued activity. He also asked about the sustainability of the high revenue growth rate and confidence in the 8-9% organic growth guidance for 2025.

Answer

CEO Kevin Lobo affirmed that Stryker remains on offense for tuck-in acquisitions and still has capacity for deals. He expressed high confidence in the 2025 guidance, citing robust product pipelines, strong commercial execution, and major launches like Pangea and LIFEPAK 35 as drivers of durable, high growth.

Travis Steed asked for details on the LIFEPAK 35 order backlog, clarification on its installed base, an update on the M&A environment, and the expected revenue contribution from recent acquisitions.

Answer

VP of Finance and IR Jason Beach described the LIFEPAK 35 backlog as 'healthy' and confirmed the 100,000+ unit installed base is Stryker's worldwide figure. CEO Kevin Lobo added that this creates a multi-year tailwind for the Medical division and noted the M&A pipeline remains strong. He also clarified that of the $300 million in expected sales from 2024 acquisitions, roughly half will be inorganic in 2025.

Travis Steed inquired about Dexcom's preliminary outlook for 2026 growth, seeking high-level color for modeling purposes amidst market attention on future estimates.

Answer

Jake Leach, President and Interim CEO, indicated that while specific 2026 guidance isn't provided, the current global coverage landscape suggests a double-digit growth runway for the next couple of years. He noted that the top end of their base case range for 2026 is likely slightly below current Street estimates, with potential for outperformance driven by expanded access and innovation.

Travis Steed asked for color on Dexcom's potential 2026 growth estimates and high-level modeling, seeking insight into the company's outlook beyond the current fiscal year.

Answer

Jake Leach, President and Interim CEO, and Jereme Sylvain, CFO, indicated that while specific 2026 guidance is not yet available, the current global coverage landscape supports double-digit growth for the next couple of years. They noted that the top end of their base case range is likely slightly below current Street estimates, with opportunities for outperformance through expanded access and innovation. The base case assumes existing coverage, not potential future expansions.

Travis Steed of Bank of America inquired about the confidence behind raising the full-year revenue guidance, asking for color on new patient starts and the momentum in the Type 2 non-insulin opportunity.

Answer

EVP & CFO Jereme Sylvain explained that the confidence stems from strong new customer starts in the non-insulin segment, driven by expanded coverage from the three major PBMs. He noted that the sales team is executing well and the strong performance in the first half of the year justified the guidance increase.

Travis Steed of Bank of America asked about the 50 basis point inflation impact built into guidance, questioning if it was directly related to tariffs and if exemptions like the Nairobi exemption were applicable.

Answer

CFO Jereme Sylvain clarified that the company does not expect a material impact from direct tariffs due to its U.S. manufacturing presence and historical exemptions. The 50 bps impact is a prudent estimate for indirect inflationary pressures on raw material costs from suppliers throughout the global trade landscape.

Travis Steed sought an update on the G7 15-day sensor's regulatory process and the expected rollout plan following its approval.

Answer

Jacob Leach, an executive at DexCom, expressed high confidence in a near-term FDA approval, stating they are at the tail end of a great interactive review. He confirmed a planned launch in the second half of 2025, emphasizing that the timing is dependent on securing payer coverage and coordinating with pump integration partners to ensure a smooth user experience.

Travis Steed asked about the components of the 2025 outlook, including the U.S. recovery trajectory, the contribution from Stelo, and the impact of rebate eligibility.

Answer

CFO Jereme Sylvain stated the 2025 outlook assumes a stable market and stable DME share. The $4.6 billion target incorporates a range of outcomes for Stelo. He also confirmed that the outlook assumes 100% rebate eligibility, meaning the year-over-year growth headwind from increasing rebates will not be a factor in 2025.

Travis Steed asked for an update on the Novum IQ LVP hold, including reasons for delay, potential redesigns, and its impact on guidance. He also asked Andrew Heider about Baxter's M&A willingness and Joel Grade about plans to improve free cash flow given recent low generation.

Answer

EVP and CFO Joel Grade explained the Novum hold supports safe use while developing corrections, with timing uncertain beyond 2025, noting customer alternatives. President and CEO Andrew Heider reiterated balance sheet strengthening and innovation investment as priorities, with M&A as future 'fold-in' opportunities. Joel Grade confirmed positive Q3 2025 free cash flow ($126M), anticipating continued Q4 generation, and aiming for 80% cash conversion, addressing past challenges from operations, Hurricane Helene, tariffs, and inventory.

Travis Steed from Bank of America Corporation inquired about the Novum IQ Large Volume Pump situation, specifically why the resolution is taking longer, if a product redesign or FDA refiling is necessary, and the impact of customer responses on the guidance change. Steed also asked CEO Andrew Heider about Baxter's M&A strategy, including the willingness to pursue acquisitions and accept potential margin dilution, and questioned CFO Joel Grade on plans to improve free cash flow generation, addressing past challenges and underlying performance.

Answer

EVP and CFO Joel Grade explained that the Novum IQ hold supports safe device use while developing additional corrections, acknowledging that the timing and nature of the resolution, expected beyond 2025, are leading some customers to evaluate alternatives or switch to Spectrum IQ. President and CEO Andrew Heider reiterated that strengthening the balance sheet and deleveraging are current priorities, alongside investing in innovation. He noted that M&A would be part of the future growth story, focusing on 'fold-in, tuck-in opportunities' once the balance sheet is stronger. Grade detailed that Q3 free cash flow was positive, with anticipated continued improvement in Q4 and next year, addressing past issues like operational performance, Hurricane Helene expenses, tariffs, and inventory challenges.

Travis Steed of Bank of America requested a breakdown of the $100 million revenue guidance reduction by product area (Spectrum, IV Solutions, Pharma). He also asked about the long-term strategy to return to 4-5% revenue growth and the potential for the new CEO to re-evaluate the growth model.

Answer

EVP & CFO Joel Grade did not provide a specific breakdown but reiterated that the low end of guidance assumes no Novum shipments and no improvement in fluid conservation for the rest of the year. EVP & COO Heather Knight added that customer contracts with minimum volume commitments provide confidence that the headwinds are temporary. Both executives highlighted innovation, new product launches, and the abatement of current headwinds as key factors to return to the 4-5% growth target.

Travis Steed of Bank of America requested a breakdown of the $100 million revenue guidance reduction and asked about the path back to 4-5% long-term growth, including the potential for the new CEO to re-evaluate the model.

Answer

EVP & CFO Joel Grade explained the guidance reduction reflects a conservative stance, assuming no new Novum shipments and no improvement in fluid conservation. EVP & COO Heather Knight added that innovation, new product launches, and the eventual abatement of current headwinds are key to returning to the long-term growth target. Joel Grade reinforced that Novum and fluid volume recovery are critical drivers.

Travis Steed asked for clarification on the Q1 gross margin, the impact of TSA and MSA revenues on margins, and the long-term strategy to return to pre-COVID operating margin levels.

Answer

EVP & CFO Joel Grade clarified that the gross margin was affected by cost reclassifications, MSA revenue dilution, and North Cove recovery costs. He outlined the long-term path to margin expansion through strong growth, new product launches, pricing, product mix improvements, and the eventual elimination of stranded costs from the Kidney Care divestiture.

Travis Steed questioned the state of the IV solutions business post-Hurricane Helene, asking about customer second-sourcing, and also inquired about 2025 free cash flow generation and the rationale for the Frontline Care write-down.

Answer

An executive, identified as Heather, stated that due to the swift recovery, the company is not seeing many customers adopt a second source for IV solutions, and new GPO contracts are in line with or better than expectations. Executive Joel Grade projected free cash flow conversion to be around 80% for the full year, though Q1 will be negatively impacted by hurricane-related payments and inventory restocking. He clarified the Frontline Care write-down was a result of 2024's performance impact on the model, not a change in long-term growth concerns.

Travis Steed asked about the performance of the Healthcare Systems & Technologies (HST) segment, confidence in a 2025 primary care market recovery, and the rationale for reaffirming 2025 guidance despite the hurricane impact.

Answer

CEO José Almeida explained that while the Front Line Care division faces softness, the U.S. Patient Support Systems business is growing double-digits. He expressed confidence in 2025 due to the strong Novum IQ pump launch, HST normalization, and a rebound in Pharma. CFO Joel Grade added that positive pricing, supply chain efficiencies, and cost containment initiatives support the reaffirmed 4-5% growth and 16.5% margin targets for 2025.

Travis Steed asked about the drivers of Q3 strength, why full-year revenue guidance was reiterated despite strong Q3, and the expected flow-through for Q4. He also inquired about Flyrcado's progress towards the $30 million target for 2025 and its ramp-up in 2026 and 2027.

Answer

VP and CFO Jay Saccaro attributed Q3 strength to AVS innovation and strong commercial execution, particularly in EMEA and USCAN, and noted a historical Q3 to Q4 step-up. President and CEO Peter Arduini stated Flyrcado would be short of the $30 million target for 2025 due to prioritizing customer experience and supply consistency, but expressed confidence in its significant ramp in 2026 and beyond towards a $500 million target by 2028.

Travis Steed inquired about the drivers of GE HealthCare's strong Q3 performance, the rationale for reiterating full-year revenue guidance, and the outlook for Q4. He also asked for an update on Fercato's $30 million target for 2025 and its ramp-up over 2026 and 2027.

Answer

VP and CFO Jay Saccaro attributed Q3 strength to commercial performance, AVS innovation, and a healthy CapEx environment in EMEA and the U.S., projecting 3-4% growth for Q4, including recovery from a Patient Care Solutions product hold. President and CEO Peter Arduini stated that Fercato would fall short of the $30 million target for 2025 due to a deliberate decision to prioritize customer experience, supply-side yield consistency, and workflow optimization, but expressed excitement for 2026 and beyond, aiming for $0.5 billion by 2028 and potentially $1 billion if 25% of the PET myocardial perfusion market converts.

Travis Steed inquired about the specific type of EP product (PSA or RF) experiencing changes, whether the demand shift was only known in Q3, and if it was due to a different view of end market demand. He also asked if the affected product was primarily U.S. or international.

Answer

Payman Khales, President and CEO-elect, stated that the impact is from two electrophysiology products but could not be more specific about the product type due to confidentiality. He confirmed that the customer's revised demand forecast, impacting 2026, was indeed communicated in Q3, with discussions continuing into Q4. Khales also declined to specify the geographic market (U.S. or international) for confidentiality reasons.

Travis Steed inquired about the specific type of electrophysiology product (PSA or RF) experiencing changes, the timeline of Integer's awareness of the demand shift (Q3), and whether the affected product is primarily U.S. or international.

Answer

Payman Khales, President and CEO-elect, confirmed the impact relates to two electrophysiology products and that the customer's revised demand view emerged in Q3 due to slower market adoption. He stated that due to confidentiality, he could not specify the product type or geographic market.

Travis Steed inquired about the $30 million backorder mentioned, specifically which businesses were most impacted and whether the company expects this backorder to be resolved in Q4.

Answer

Chairman and CEO Mike Mahoney explained that the backorder resulted from a comprehensive global ERP implementation at the Kerkrade distribution facility, which did not go as planned. The impact was fairly broad-based, trending more towards the MedSurg and Peripheral Interventions businesses, with less impact on EP and Watchman. He confirmed that the team has made good progress in recovery and expects the backorder to reduce to acceptable levels by the end of the year.

Travis Steed from Bank of America asked for details regarding the $30 million backorder mentioned, specifically which businesses were most impacted in the quarter and if the company anticipates a full recovery of this backorder in Q4.

Answer

Chairman and CEO Mike Mahoney explained that the backorder resulted from a comprehensive global ERP implementation at the Kerkrade distribution facility, which did not go as planned but is now recovering. The impact was fairly broad-based, trending more towards the MedSurg and Peripheral Interventions (PI) businesses, with less impact on EP and WATCHMAN. Mahoney stated that while the team has made good progress, they are not yet 100% out of the woods, but expect the backorder to reduce to acceptable levels by the end of the year.

Travis Steed of Bank of America asked for a high-level view of the long-range plan ahead of the upcoming Analyst Day, particularly regarding the company's confidence in outgrowing its rising weighted average market growth rate. He also requested an update on the forward-looking tax rate following recent legislation.

Answer

CEO Mike Mahoney stated that the company's goal is to continue improving its weighted average market growth rate (WAMGR) and outgrowing its markets, supported by enhanced R&D investment, with more details to come at Investor Day. CFO John Monson provided a significant update on taxes, explaining that the previously anticipated 200-300 basis point headwind for 2026 has been "largely eliminated" by new legislation.

Travis Steed of Bank of America asked about the drivers of the strong Q1 operating margin and requested more detail on the assumptions underlying the $200 million tariff headwind, including timing and regional breakdown.

Answer

Daniel Brennan, Executive Vice President and CFO, attributed the strong Q1 margin to favorable product mix, led by high-growth, high-margin products like FARAPULSE and WATCHMAN. He detailed that the $200 million tariff headwind is a 2025 impact, mostly in the second half, and assumes the commencement of reciprocal tariffs with China in Q3. Despite this, he reaffirmed the full-year target of 50-75 basis points of operating margin expansion.

Travis Steed asked how Boston Scientific's M&A strategy is evolving as the company's revenue base becomes larger and grows faster, making it more challenging for smaller deals to have a significant impact.

Answer

CEO Mike Mahoney stated that the M&A strategy remains largely unchanged. The company focuses on long-term investments through a combination of internal R&D, its extensive VC portfolio, and strategic tuck-in acquisitions. He emphasized the core goal is to continuously increase the company's weighted average market growth rate (WAMGR) and to grow faster than that rate, a formula they believe is effective regardless of company size.

Travis Steed from Bank of America followed up on the AVANT GUARD trial pause, asking for reassurance on why this event doesn't alter the company's overall view on FARAPULSE's safety profile.

Answer

CMO Dr. Ken Stein reiterated that the trial is studying a new patient population (newly diagnosed persistent AF) for which ablation is not currently the standard of care. He emphasized that the observations were not life-threatening and the company's confidence in FARAPULSE's safety and efficacy remains high, based on extensive commercial experience with over 125,000 patients and published data on 20,000 patients.

Travis Steed asked about the utilization trends for older Xi systems when hospitals upgrade to Da Vinci 5 and redeploy the Xi units to alternative sites, such as ambulatory surgery centers. He also inquired about Intuitive Surgical's investments in new platforms, particularly in cardiac surgery, and how the company plans to apply the quintuple aim to address current standard of care problems in this area.

Answer

Dave Rosa, CEO, explained that the consistent user interfaces between Da Vinci 5 and Xi allow surgeons and care teams to easily move between platforms, facilitating redeployment to alternative sites like ASCs. He also highlighted the interchangeability of instruments as an advantage for fleet flexibility. Regarding new platforms, Dave Rosa, CEO, emphasized that Da Vinci 5's precision motion control and imaging capabilities, combined with new instrumentation, could differentiate cardiac surgery. He outlined Intuitive's core capabilities in advanced robotics and their strategy to address unmet healthcare needs where these capabilities intersect.

Travis Steed from Bank of America inquired about the drivers behind Intuitive's strong Q2 margins, their sustainability, and the company's strategy regarding third-party instrument reprocessing.

Answer

CFO Jamie Samath attributed the high margin to strong 21% revenue growth, a higher mix of system purchases versus leases, and leveraged OpEx, but cautioned this was not the 'new normal'. CEO Dave Rosa addressed reprocessing by stating that hospital value committees will weigh factors like safety, reliability, and supply continuity against savings, expressing confidence that Intuitive's high-quality, innovative instruments provide the greatest value.

Travis Steed from Bank of America inquired about the drivers behind the strong Q2 margin performance and its sustainability, and also asked about the company's strategy regarding third-party instrument reprocessing.

Answer

CFO Jamie Samath attributed the strong margin to 21% revenue growth, a higher mix of system purchases versus leases, and lower-than-expected OpEx, but cautioned this was not the 'new normal'. CEO Dave Rosa addressed reprocessing by emphasizing that hospital value committees evaluate safety, reliability, and performance, stating his belief that Intuitive's high-quality instruments, support, and predictable supply chain provide the greatest value. He added that Intuitive will continue to innovate, extend instrument use, and lower costs to differentiate its portfolio.

Travis Steed inquired about the anticipated 1.7% tariff impact in 2025, asking for a breakdown by region and the expected cadence throughout the year. He also asked for a comparison of the current capital spending environment to the one seen in 2022.

Answer

Executive Jamie Samath explained that roughly half of the tariff impact stems from U.S.-China trade, with about 40% from imports into the U.S. from other regions. He noted the impact would increase quarterly, with the Q4 exit rate being higher than 1.7%. Regarding the capital environment, Samath contrasted the strong U.S. customer response to da Vinci 5, aided by leasing flexibility, with budget constraints in some OUS markets. He stated that while tariff impacts are a risk, they have not yet materialized in core capital demand.

Travis Steed asked a strategic question about the drivers behind the company's R&D spending, which is approaching $1 billion annually, and whether future investment will focus on new platforms, expanding existing ones, or geographic expansion. He also asked for details on the 10-15% operating expense growth guidance for 2025 and the potential impact of tariffs.

Answer

CEO Gary Guthart explained that R&D investment is a mix of all three areas: developing new platforms, securing new indications and capabilities for existing systems, and creating features to help late adopters. CFO Jamie Samath stated that R&D and SG&A would grow at similar rates, with the 10-15% range largely tied to procedure volume. Regarding tariffs, he acknowledged a potential 'material impact' if tariffs are placed on goods from Mexico, where many instruments are made, and noted pricing could be a possible response.

Travis Steed inquired about the da Vinci 5 ramp-up plan, including potential software upgrades before the mid-2025 broad launch, and asked how hospital CFOs are reacting to the system's potential contribution margin benefits.

Answer

President David Rosa confirmed that scheduled software updates will continue, with a key release enabling more hardware and digital features timed for the broad launch. He noted dV5 supply will increase modestly quarter-over-quarter. CFO Jamie Samath added that while it's early, some key opinion leaders are reporting console time improvements, which supports conversations with hospital administration about efficiency gains and higher throughput.

Travis Steed inquired about the sustainability of Abbott's medical device business, which has seen over ten quarters of double-digit growth, considering underlying procedure market trends and the pipeline. He also asked about the company's strategy for its balance sheet and M&A, including cash utilization and potential new market entries.

Answer

Robert Ford, Chairman and CEO, affirmed the sustainability of the device business, explaining its evolution from high single-digit to double-digit growth by accelerating high-growth areas (diabetes, EP, structural heart) and repositioning slower segments like CRM (now double-digit) and Vascular (now 5-6% growth). He cited significant, disproportionate investments in product development and clinical trials. Regarding the balance sheet, Ford noted active cash utilization for dividends, share buybacks, debt paydown ($3 billion next year), and internal investments. He emphasized a strong organic pipeline allows for selective M&A in strategically fitting opportunities with attractive returns.

Travis Steed from Bank of America inquired about Abbott's M&A pipeline in Diagnostics and MedTech and whether the company's comfort with the 2026 double-digit EPS consensus includes current tariff assumptions.

Answer

Chairman and CEO Robert Ford described the M&A environment as favorable but stressed that Abbott's strong organic pipeline allows for selectivity, focusing on strategic fit and returns. Regarding 2026, he confirmed the outlook is based on current knowledge of tariffs and that the company is focused on long-term mitigation strategies, such as its global manufacturing network, rather than just short-term inventory adjustments.

Travis Steed followed up on the tariff impact, asking about the assumed FX rates, the geographic split of the impact, and the types of mitigation offsets.

Answer

Chairman and CEO Robert Ford confirmed the impact estimate assumes current FX rates and is evenly split between the U.S. and China. He emphasized that the most sustainable mitigation strategy involves leveraging Abbott's long-standing manufacturing framework of aligning production close to customers with built-in redundancy, which serves as a natural hedge and provides significant operational flexibility.

Travis Steed asked about the growth outlook for the Electrophysiology (EP) business in 2025, especially considering a competitor's recent setback and Abbott's strategy to bridge to its PFA catheter launch.

Answer

CEO Robert Ford stated that the Q4 EP growth rate was impacted by a difficult comparison to the prior year's strong mapping system sales, not by competitive PFA launches. For 2025, he expects continued benefits from rising procedure volumes and new products like the GridX mapping catheter. Ford projected a base case of high single-digit growth for the full year, with potential upside from recent competitive dynamics, and clarified that Abbott's PFA catheter, Volt, is expected to launch internationally in 2025.

Travis Steed questioned the Q3 performance of the Nutrition and Diagnostics divisions, which came in below expectations, and asked for the drivers of confidence in the reiterated full-year guidance, which implies a significant Q4 acceleration.

Answer

Robert Ford, Chairman and CEO, attributed the softness to temporary, one-time issues: commercial execution in international pediatric nutrition and the timing of VBP implementation in China's Core Lab business. He emphasized that the strength in the medical devices portfolio compensated for these issues and expressed high confidence in meeting the full-year guidance, noting it was the third guidance raise of the year.

Travis Steed inquired about the drivers behind Kestra Medical Technologies' raised fiscal year 2026 guidance, noting it was increased by more than the first-quarter beat, and asked for insights into the expected revenue cadence throughout the year. He also sought clarification on the company's strategies for improving in-network payer mix, its potential future trajectory, and the anticipated impact on gross margins.

Answer

President and CEO Brian Webster attributed the confidence in the raised guidance to a strong Q1 performance and bullish outlook for the rest of the year, while CFO Vaseem Mahboob highlighted the shift from 42% to 47% year-over-year growth and anticipated a steady, rather than back-end loaded, increase in top-line revenue. Regarding in-network mix, Brian Webster explained that coverage increased from 70% at IPO to nearly 80%, with a gradual incline expected as more regional payers are contracted. He emphasized the strategy of expanding sales territories in areas with known WCD demand and strong payer coverage to enhance efficiency and revenue per fitting, which will continue to benefit gross margins.

Travis Steed asked about the drivers behind Kestra Medical Technologies' raised guidance, the expected quarterly revenue cadence for the fiscal year, and the ongoing efforts to improve in-network payer mix and its impact on gross margins.

Answer

Brian Webster (President and CEO) attributed the raised guidance to a strong Q1 performance and a bullish outlook for the year. Vaseem Mahboob (Chief Financial Officer) added that the in-network mix has increased from 70% at IPO to nearly 80%, which will continue to gradually improve revenue per fitting. He also noted the company's strategy to expand sales territories where WCD demand and payer coverage are strong, aiming for a conversion rate in the high 50s from the current high 40s.

Travis Steed asked about the drivers behind the raised fiscal year 2026 guidance and the expected quarterly revenue cadence. He also inquired about the strategies for improving the in-network payer mix, its potential trajectory, and its impact on gross margins.

Answer

President and CEO Brian Webster attributed the raised guidance to a strong Q1 performance and bullish outlook for the year, noting comfort with the update. He explained that the in-network mix, currently approaching 80% from 70% at IPO, is expected to gradually increase as more regional and local payers are contracted, benefiting revenue per fitting. CFO Vaseem Mahboob added that the financial model anticipates the conversion rate to reach the high 50s from the current high 40s over the next couple of years, driven by increased coverage. He also clarified that revenue growth is expected to show a steady increase throughout the year, not back-end loaded.

Travis Steed asked about the strong growth in Cardiac Ablation Solutions (CAS) and why it isn't translating to higher overall U.S. growth, questioning the confidence in future acceleration given the performance of the base business.

Answer

Chairman & CEO Geoff Martha and EVP & CFO Thierry Piéton explained that while CAS is accelerating, overall U.S. growth was temporarily impacted by deliberate commercial changes in Pelvic Health and by U.S. diabetes patients awaiting new sensors. They expressed confidence that as these areas rebound and new products like Ardian launch, overall growth will accelerate, with an outsized impact on the U.S.

Travis Steed asked about the new CFO's guidance philosophy, the assumptions behind the FY26 revenue and EPS growth forecasts, and the visibility into the FY27 high single-digit EPS growth target.

Answer

CEO Geoffrey Martha affirmed the strength of underlying growth drivers in Cardiovascular and Neuroscience. CFO Thierry Pieton detailed the FY26 guidance, noting that a 7% operating profit growth (ex-tariffs) is partially offset by tax and interest headwinds. For FY27, he cited continued growth momentum, cost initiatives, a favorable FX shift, and accretion from the Diabetes separation as key factors for returning to high single-digit EPS growth.

Travis Steed asked about Medtronic's FY26 guidance, questioning the philosophy behind the 5% revenue target, the components of the 4% EPS growth forecast (ex-tariffs), and the visibility into the high single-digit EPS growth outlook for FY27.

Answer

CEO Geoff Martha expressed confidence in the revenue outlook, citing accelerating growth drivers like Cardiovascular (CV) and Neuromodulation. CFO Thierry Pieton detailed the EPS guidance, explaining that ~7% operating profit growth is pressured by higher taxes and interest expense. He noted the FY27 outlook is supported by continued momentum, cost efficiencies, favorable FX, and accretion from the Diabetes separation.

Travis Steed of BofA Securities pressed further on the Surgical business, asking why distributors destocked, why there was a lack of visibility, and whether the business requires the Hugo robot to return to mid-single-digit growth.

Answer

CEO Geoff Martha explained the destocking was a temporary issue driven by distributors' internal goals that arose late in the quarter. He expressed confidence in returning the Surgical business to stronger growth, noting the Hugo robot will become a growth driver in FY26. Mike Marinaro, EVP & President of the Medical Surgical Portfolio, added that they have had conversations with the distributors and expect normalized performance once target inventory levels are reached.

Travis Steed asked about Medtronic's commitment and ability to deliver long-term high single-digit earnings growth despite potential headwinds like a stronger dollar, tariffs, and the initial margin dilution from new product launches.

Answer

Chairman and CEO Geoff Martha affirmed the company's commitment. Interim CFO Gary Corona detailed the path, stating there is no change to margin expectations, with full-year operating margins guided to 25.7%. He highlighted SG&A leverage and cost discipline, noting that mid-single-digit revenue growth is expected to deliver approximately 10% EPS growth on a constant currency basis.

Travis Steed from Bank of America sought clarification if the projected Q3 growth of "scratching 6%" was organic and asked if improvements in 2025 implied that 2026 revenue growth would be at least as strong.

Answer

Chairman, President & CEO Ivan Tornos confirmed the projected Q3 growth of nearly 6% is on an organic basis, excluding Paragon 28. Regarding 2026, he declined to provide specific guidance but expressed confidence in the company's momentum, product pipeline, and the future returns on investments made in 2025.

Travis Steed sought clarification on the Q2 outlook, asking if the 'slightly higher' growth comment was relative to the reported 2.3% constant currency growth and requested quantification of the order shift from Q2 to the second half.

Answer

CFO and EVP Suketu Upadhyay confirmed the 'slightly higher' growth outlook for Q2 is relative to the 2.3% constant currency growth reported in Q1. He declined to quantify the impact of order timing shifts, stating that the company does not provide specific quarterly guidance but offers directional shaping for modeling purposes.

Travis Steed from Bank of America questioned the 2025 EPS guidance, asking why it wasn't higher and why share buybacks weren't being used to offset headwinds, and also sought confidence in the H2 revenue ramp.

Answer

CFO Suketu Upadhyay attributed the modest EPS growth primarily to a significant $0.20-$0.25 FX headwind and noted the guidance assumes no share buybacks, though optionality remains. President and CEO Ivan Tornos expressed confidence in the H2 revenue acceleration based on four factors: easier comps versus the 2024 ERP issue, the ramp-up of new products, returns on H1 OpEx investments, and favorable timing for the international business.

Travis Steed from Bank of America inquired why the 2024 guidance was reduced by more than the stated ERP impact and asked about the potential for a sales catch-up in 2025.

Answer

CEO Ivan Tornos explained the guidance cut reflects conservatism following the recent ERP challenges, uncertainty around Q4 pricing, and the need to observe commercial execution on new products. He stated the company feels very positive about 2025 as the ERP issue is contained within 2024, but declined to provide a specific outlook.

Travis Steed inquired about the current business momentum, including account additions, utilization growth sustainability, and the productivity ramp of new sales representatives. He also asked for details on the 2026 gross margin outlook, questioning the drivers between supply chain mitigation and improved tariff rates.

Answer

CFO Scott Blumberg confirmed strong momentum, noting that recent sales hires are expected to drive account growth in 2026. He stated that Q2's seasonal usage slowdown was anticipated. Regarding gross margins, Blumberg explained the positive 2026 outlook is driven by both supply chain diversification to Vietnam, which mitigates risk and offers potentially lower tariffs, and underlying improvements to the cost structure.

Travis Steed from Bank of America requested a detailed bridge for the significant reduction in the full-year EPS guidance and asked about June/July trends informing the Q3 outlook.

Answer

CFO Rick Buchholz explained the EPS guidance reduction is primarily due to the flow-through impact of lower revenue on gross margin, planned increases in direct-to-consumer (DTC) marketing spend, and a one-time, non-cash stock-based compensation charge. CEO Tim Herbert added that the Q3 guidance for 1-3% sequential growth is based on early visibility into patient flow from the second quarter.

Travis Steed from Bank of America inquired about the Q2 revenue guidance, specifically the impact of Inspire IV inventory destocking and patient warehousing for the new Inspire V system. He asked to quantify the delta versus consensus estimates and sought clarity on how the company expects to recover this in the second half of the year to reiterate its full-year guidance.

Answer

CEO Tim Herbert explained that growing awareness of the upcoming Inspire V launch led to some patients waiting for the new device. He confirmed that Q2 will be a transition quarter involving contract updates, new programmer rollouts, and working through existing Inspire IV inventory. Herbert projected mid-to-high single-digit sequential revenue growth for Q2 and expressed confidence that the company will make up the volume in the second half of the year as the full launch of Inspire V ramps up.

Travis Steed asked about the expected path to profitability in the 2025 EPS guidance and for details on the Department of Justice (DOJ) Civil Investigative Demand (CID).

Answer

Chief Financial Officer Rick Buchholz clarified that while Q1 2025 is not expected to be profitable due to seasonality, the company is committed to year-over-year operating margin improvement with sequential quarterly gains thereafter. Chairman and CEO Tim Herbert addressed the DOJ CID, stating it was received on January 17 and the company will fully cooperate. He expressed confidence in their compliance programs and does not anticipate the investigation will disrupt business operations, declining to provide further details at this early stage.

Travis Steed of Bank of America Securities inquired about the coding strategies for the upcoming Inspire V device and the rationale for not taking a price increase. He also asked for confirmation on whether the 2025 revenue consensus remains reasonable, considering factors like competition, the Inspire V launch, and GLP-1s.

Answer

CEO Tim Herbert stated they are finalizing one primary coding option with payers and decided to maintain system-level pricing consistent with Inspire IV, noting the elimination of the sensing lead will reduce COGS. CFO Rick Buchholz confirmed that while it's early, the current 2025 revenue consensus is 'not unreasonable,' citing tailwinds like market expansion in the U.S. and France, DTC investments, the Inspire V launch, and expanded payer coverage.

Travis Steed from Bank of America asked about the rationale and timing of the peripheral sales force split, potential near-term disruption, and the implied deceleration in the U.S. thrombectomy growth guidance for H2 2025.

Answer

CEO Adam Elsesser explained the sales force split is crucial for providing dedicated focus on both the high-growth thrombectomy business and the embolization portfolio, especially with the launch of the margin-accretive Ruby XL. He noted hiring is complete, minimizing disruption. Regarding guidance, he indicated the company is being prudent and trying not to get ahead of its enthusiasm.

Travis Steed asked for details on the newly cleared Ruby XL peripheral coil, including its product characteristics and the potential size of its market opportunity.

Answer

CEO Adam Elsesser described Ruby XL as a larger, softer, and longer coil built on the company's existing platform, designed to fill larger vessel anatomies more quickly and completely. He stated that it was too early to size the market opportunity and that the company would provide more detail after the initial cases are completed post-launch.

Travis Steed from Bank of America questioned why the full-year EPS guidance wasn't raised more significantly given the Q2 beat and reduced tariff impact. He also asked about long-term EPS leverage and the market share capture from a competitor exiting the international TAVR market.

Answer

CFO Scott Ullem explained that while Q2 was strong, headwinds from the pending GenaValve acquisition warrant caution on raising EPS guidance further. He reaffirmed the long-term goal of bottom-line leverage. Corporate VP Larry Wood added that capturing share from the exiting competitor depends on demonstrating the value of Edwards' premium technology over lower-priced alternatives.

Travis Steed from Bank of America questioned why the EPS guidance wasn't raised more significantly given the Q2 beat and inquired about long-term EPS leverage. He also asked about market share capture from the exiting international TAVR competitor.

Answer

CFO Scott Ullem explained the cautious EPS guidance raise was due to headwinds like the pending GenaValve acquisition, while reaffirming long-term leverage goals. Larry Wood, Corporate VP of TAVR, stated that capturing share from the exited competitor is a long-term effort focused on demonstrating the value of Edwards' premium technology over lower-priced alternatives.

Travis Steed asked about the potential for the TAVR National Coverage Determination (NCD) to be loosened to ease capacity constraints and for modeling guidance on Q2 TAVR growth.

Answer

Larry Wood, Group President of TAVR, stated it is time to reopen the NCD to cover asymptomatic patients and add more hospitals, noting that while acute capacity issues have eased, continued investment is needed. CFO Scott Ullem guided that to meet the full-year forecast, TAVR growth would need to be around 6% for the remaining quarters of the year, with some expected variability.

Travis Steed sought confirmation that the full-year TAVR guidance is on a constant currency basis and asked for quantification of the Q1 selling day headwind. He also requested an update on the timelines for the CLASP IIF and CLASP II TR clinical trials.

Answer

CFO Scott Ullem confirmed the 5-7% TAVR guidance is constant currency and quantified the Q1 selling day headwind as approximately a 1-point global impact. Daveen Chopra, Global Leader of TMTT, stated that CLASP IIF enrollment will continue through 2025, while CLASP II TR completed enrollment in Q4 2024, initiating a timeline involving a 1-year follow-up and subsequent regulatory submissions.

Travis Steed asked if the 27-28% operating margin guidance for 2025 includes the pending JenaValve acquisition and if the current 5-7% TAVR growth is the new steady-state expectation.

Answer

CFO Scott Ullem clarified the 27-28% margin guidance includes three of the four recent acquisitions but did not specify the impact of the pending JenaValve deal. He and CEO Bernard Zovighian declined to provide a long-term TAVR growth forecast, stating they are positive on the outlook and will provide details at the December investor conference.

Travis Steed inquired about the evolution of prescriber uptake as iLet awareness grows, requested an update on patch pump development milestones, and asked about a perceived decrease in DME revenue per patient in Q1.

Answer

CEO Sean Saint noted that as prescribers see positive real-world data, they use the iLet more broadly beyond their most challenging patients. He reiterated the 2027 commercial launch target for the patch pump. CFO Stephen Feider clarified that the Q1 DME revenue variance was due to lumpiness in distributor inventory levels between quarters, not a change in underlying patient economics.

Travis Steed asked for clarity on the visibility of the pharmacy mix assumptions within the 2025 guidance, inquired about a potential Q1 revenue figure, and questioned if Beta Bionics was observing a market slowdown similar to competitors. He also asked for an update on the patch pump timeline.

Answer

CFO Stephen Feider confirmed confidence in the pharmacy mix guidance due to the new Prime Therapeutics contract and three months of 2025 data, but declined to confirm a specific Q1 revenue number. CEO Sean Saint stated the company did not see a market slowdown at the end of 2024 and reiterated the patch pump is on track for commercialization by the end of 2027 with no new updates.

Travis Steed of Bank of America followed up on the tariff discussion, seeking to reconcile the math from the prior quarter's call with the new guidance. He calculated a potentially much larger annual impact from China tariffs and asked for clarification on the true run rate versus the guided Q4 impact.

Answer

EVP and CFO Todd Garner responded that the current analysis is more specific on a product-by-product basis and reiterated that the timing of the P&L impact is delayed as the cost travels with inventory. He provided the specific EPS impact for Q3 ($0.02) and Q4 ($0.12) to illustrate the ramp but declined to provide a 2026 forecast, stating that the Q4 figure gives decent visibility into the run rate before considering potential mitigation efforts or business growth.

Travis Steed of BofA Securities asked for more detail on the expected cadence of EPS and margins in Q1, beyond the provided revenue guidance. He also sought to confirm that potential tariffs from China were excluded from the 2025 forecast.

Answer

CFO Todd Garner indicated that Q1 EPS and margins should 'travel decently together' with the revenue guidance and did not provide further specifics, noting only that currency headwinds are slightly heavier in Q1. He explicitly confirmed that the 2025 guidance excludes any potential impact from China tariffs, in addition to those from Mexico and Canada.

Travis Steed's team asked for clarification on the overall new patient growth in Q1, considering the combined impact of MDI and competitive conversions.

Answer

CFO Leigh Vosseller confirmed that total new patient starts were up year-over-year. She specified that this growth was primarily driven by strong MDI conversions, which offset continued headwinds from competitive conversions, a trend that was in line with the company's expectations.

Travis Steed from Bank of America asked for more color on the guided gross margin ramp in 2025 and questioned the specific impetus and timing for the sales force expansion.

Answer

CFO Leigh Vosseller explained the margin ramp is driven by seasonality and the scaling of Mobi pump production. CCO Mark Novara stated the timing for the sales force expansion was right due to the portfolio's potential, a promotionally sensitive market, and the need to realign territories for efficiency, which also adds share of voice.

Travis Steed asked about the potential impact of future tariffs on Tandem's business, given its international supply chain for components.

Answer

President and CEO John Sheridan acknowledged it is a topic they are monitoring. He noted that while their supply chain does extend into potentially affected Asian countries, the company has flexibility to move sourcing as needed and has other mechanisms to offset potential cost increases. They will take action as any policies become more specific.

Asked for details on the drivers of the Q3 gross margin upside, the outlook for margins in 2024, and the trend for EBITDA margins.

Answer

The gross margin improvement is due to resolving previous yield and supply chain issues, leading to an increased Q4 gross margin guide of 74% to 75%. The company does not see 75% as a cap and expects further improvements. The positive adjusted EBITDA trend is expected to continue due to the business's natural operating leverage, despite a slight increase in Q4 OpEx for commissions and marketing.