Travis Steed

Travis Steed asked about the one-time impacts on Q4 2025 margins, the drivers behind the 50 to 100 basis points margin expansion guidance for 2026, and the role of the $500 million cost savings program. He also inquired about the company's perspective on the healthcare IT business and the impact of AI.

Answer

CFO Wayde McMillan explained that approximately 150 basis points of Q4 gross margin costs were one-time due to separation activities, with a normalized gross margin closer to 55%. For 2026, margin expansion is driven by sales leverage, programmatic savings, and the Transform for the Future program, despite tariff headwinds. CEO Bryan Hanson clarified that AI is seen as an opportunity, not a threat, for autonomous coding, with Solventum uniquely positioned due to decades of market presence, over 1 million proprietary algorithms, and vast data sets.

Travis Steed inquired about Solventum's Q4 2025 margin performance, its deviation from street expectations, and the assumptions underpinning the 2026 operating margin guidance, specifically regarding the $500 million cost savings program. He also asked for more details on the Healthcare IT business and the role of AI.

Answer

CFO Wayde McMillan clarified that approximately 150 basis points of Q4 gross margin costs were one-time, leading to a normalized 55% gross margin. He detailed that 2026's 50-100 basis point operating margin expansion is driven by sales leverage, programmatic gross margin savings, and initial benefits from the Transform for the Future program, despite a doubling of tariff headwinds. CEO Bryan Hanson emphasized that AI is seen as an opportunity, particularly as a lever for autonomous coding, where Solventum's decades of proprietary algorithms and vast data sets provide a differential capability.

Travis Steed asked about Solventum's progress towards its 2028 long-range plan (LRP) revenue growth target of 4%-5%, noting the company is already close to market growth. He also questioned the implications of the balance sheet transformation for portfolio optimization and the ability to improve free cash flow to fund acquisitions.

Answer

CEO Bryan Hanson affirmed that the LRP ramp is happening faster than expected, indicating it's a matter of 'when' not 'if' they reach the 4-5% target, with plans to revise higher thereafter. CFO Wayde McMillan added that 2026 is not expected to have significant full-year tougher or easier comps. Bryan Hanson stated that the strengthened balance sheet and durable operating cash flow enable both M&A (tuck-in acquisitions under $1 billion in existing areas) and potential capital return initiatives. Wayde McMillan clarified that underlying free cash flow, excluding separation and divestiture impacts, remains strong with over 90% conversion year-to-date.

Travis Steed asked about Solventum's progress towards its 2028 long-range plan (LRP) revenue growth target of 4-5%, noting the company is only 100 basis points away from market growth this year, and inquired if that gap could be closed next year, along with any puts and takes for 2026 models. He then followed up on the balance sheet transformation, asking what it means for portfolio optimization, how quickly it could happen, and the ability to improve free cash flow to fund acquisitions.

Answer

CEO Bryan Hanson stated that the LRP ramp is happening faster than expected, emphasizing it's a question of 'when' not 'if' they reach the target, and that they will aim for higher targets once achieved. CFO Wayde McMillan added that for 2026, there are no significant full-year tougher or easier comps, and the Q4 IPSS headwind will net out for the year. SVP of Investor Relations Amy Wakeham highlighted confidence in durable operating cash and the balance sheet, enabling both M&A and potential cash return. Wayde McMillan further clarified that while the P&F divestiture impacts the free cash flow line, it's offset in investing cash flows, and excluding these major initiatives, the year-to-date free cash flow conversion is over 90%, demonstrating strong cash generation.

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 asked about the company's ability to continue expanding margins once the Transition Service Agreements (TSAs) roll off in a couple of years, and if 2027 would serve as a reset base for earnings to grow faster than revenue with continued margin expansion.

Answer

John Deren, Executive Vice President and Chief Financial Officer, stated that the goal is to completely mitigate and offset stranded costs. He emphasized that the long-term opportunity for margin expansion comes from P&L leverage due to continued mid-single-digit growth while maintaining a stable OpEx base. He confirmed that 2027 would reset the base, and the opportunity for earnings to grow faster than revenue and for margins to expand exists in both 2026 and 2027.

Travis Steed asked about the company's ability to continue expanding margins once the transition service agreements (TSAs) expire in a couple of years, and whether 2027 will serve as a reset base for continued earnings per share (EPS) leverage, allowing earnings to grow faster than revenue.

Answer

John Deren, EVP and CFO, explained that while there might be some overlap with restructurings as TSAs roll off, the goal is to completely mitigate stranded costs. He emphasized that the primary opportunity for continued margin expansion beyond that is P&L leverage from ongoing mid-single-digit revenue growth, allowing a large base of OpEx to remain stable. He confirmed that 2027 will see some of this leverage, not just a reset.

Travis Steed asked for clarification on Carlsmed's 2026 revenue guidance, specifically the underlying assumptions for new surgeon additions versus utilization growth, and the impact of reduced lead times on surgeon adoption and reorders.

Answer

Michael Cordonnier, CEO and Chairman, explained that the 2026 guidance of $70 million to $75 million reflects a prudent approach for a newly public company, with good momentum observed in training and adoption for both lumbar and cervical platforms. Regarding lead times, he highlighted that achieving a 6-business-day turnaround is a significant milestone, which is expected to accelerate new surgeon adoption and enable the company to address emergent cases more effectively, positively impacting the business.

Travis Steed questioned the building blocks of Carlsmed's 2026 revenue guidance, specifically asking about assumptions for new surgeon additions, utilization growth, and further details on the cervical product's expected contribution. He also inquired about the business impact of the reduced production lead time to 6 business days.

Answer

CEO Michael Cordonnier stated that the 2026 guidance reflects a prudent approach for a newly public company, expressing confidence in current momentum from training programs and adoption across both lumbar and cervical platforms. Regarding lead time, he emphasized that reaching 6 business days is a significant milestone, expected to accelerate new surgeon adoption and enable the company to address emergent cases more effectively.

Travis Steed inquired about the assumptions behind the 2026 revenue guidance, noting its similarity in dollar growth to 2025 despite a doubled total addressable market (TAM), accelerating account additions, and increasing utilization. He also asked for more details on the commercial plan for delirium, including its sales approach and potential benefits for account adds and penetration.

Answer

Scott Blumberg, Chief Financial Officer, explained that the guidance philosophy remains consistent with an appropriate level of conservatism, anticipating potential upside. He noted that pipeline acceleration is expected towards late 2026 and more significantly in 2027, with modest neonate impact baked into Q4. Jane Chao, Co-founder and Chief Executive Officer, added that the delirium commercial pilot focuses on real-world validation, primarily leveraging existing accounts to drive deeper utilization through new patient populations and synergistic interactions with seizure monitoring.

Travis Steed inquired about the assumptions and moving parts behind the 2026 revenue guidance, noting the similar dollar growth to 2025 despite an expanded total addressable market and accelerating account additions. He also asked for more detail on the commercial plan for delirium, including its potential impact on account adds and penetration, and whether it requires a different sales approach.

Answer

CFO Scott Blumberg stated that the guidance philosophy remains consistent with appropriate conservatism, suggesting potential for upside. He clarified that the pipeline's impact is expected later in 2026 and more significantly in 2027, with neonate contributions being modest in Q4 2026. CEO Jane Chao explained that the delirium commercial pilot primarily targets existing accounts for real-world validation and workflow optimization, aiming to drive deeper utilization through new patient populations and synergistic effects with seizure monitoring.

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 asked about the sustainability of the accelerated U.S. spine growth over recent quarters and how Globus Medical views a competitor's recently launched enabling technology robot navigation system.

Answer

Keith Pfeil, President and CEO, affirmed the U.S. spine growth as 'durable' and sustainable, driven by product launches and competitive rep conversions. He stated that ExcelsiusGPS, launched in 2017, remains a strong option, and new competitive offerings reinforce their original floor-mounted, navigated robotic approach, positioning them well.

Travis Steed from Bank of America Securities asked about the sustainability of Globus Medical's accelerated U.S. spine growth over the past few quarters. He also inquired about the company's view on a competitor's recently launched enabling technology robot navigation system and its potential competitive impact.

Answer

Keith Pfeil, President and CEO, affirmed that the U.S. spine growth is durable and sustainable, driven by continuous product launches, aggressive competitive rep conversions, and a renewed focus on core business strengths post-M&A. Regarding competition, Pfeil stated that while the competitive landscape evolves, Excelsius remains a strong option, reinforcing Globus Medical's 2017 floor-mounted, navigated robotic system. He believes the company's best-in-class features and aggressive robot placement strategy position it well against competitive threats.

Travis Steed asked for more color on the revenue cadence for 2026, particularly regarding the second-half weighting and quantification of tailwinds. He also questioned whether the 'innovation super cycle' over the next five years would sustain the long-term growth rate or accelerate it beyond the last five years.

Answer

CFO Anshul Maheshwari explained that 2026 has numerous tailwinds, including a formidable physician base, improved reimbursement, new product launches, and commercial expansion. He noted that revenue growth is expected to be back-half weighted to allow these tailwinds to materialize, and SI-BONE focuses on annual and multi-year cycles rather than quarterly guidance. CEO Laura Francis stated that the innovation super cycle aims to sustain and potentially accelerate growth beyond the 20% average since the IPO, by developing unique platform technologies that expand the total addressable market in new disease states, specifically targeting spine and interventional, and leveraging core competencies in compromised bone.

Travis Steed asked for more color on the revenue cadence for 2026, specifically regarding the second-half weighting and how Q1 might titrate, as well as a quantification of the tailwinds. He also questioned whether the 'innovation super cycle' over the next five years would sustain or accelerate the company's long-term growth rate.

Answer

CFO and COO Anshul Maheshwari listed numerous tailwinds for 2026, including a formidable physician base, improved reimbursement, new product launches (INTRA Ti, 2nd BDD product), and commercial expansion. He stated that revenue growth is expected to be back-half weighted to allow these tailwinds to materialize, and the company focuses on annual and multi-year cycles rather than quarterly guidance. CEO Laura Francis explained that the innovation super cycle involves regularly launching unique technologies targeting new clinical adjacencies, leveraging core competencies in compromised bone, and is expected to drive growth multiple times the broader market rates, expanding the total addressable market.

Travis Steed inquired about the company's confidence in accelerating sales growth in 2027 and beyond, asking what drivers provide this visibility and how much of it is attributable to the pay-as-you-go model versus Mobi.

Answer

President and CEO John Sheridan stated that the most impactful element will be the ongoing implementation of the pay-as-you-go model, which will substantially increase revenue as more customers adopt it. He also highlighted an exciting pipeline, including the first extended wear patch (Mobi Tubeless) expected this year, which will compete effectively in the market with a better algorithm and pharmacy channel access. Future innovations, such as a fully closed-loop system targeted for 2027 or 2028, further contribute to management's confidence in sustained growth.

Travis Steed inquired about the drivers of Tandem Diabetes Care's confidence and visibility for accelerating sales growth in 2027 and beyond, and the relative contributions of the PayGo model versus new products like Mobi.

Answer

CEO John Sheridan identified the ongoing implementation of the PayGo model as the most impactful element, expecting substantial revenue growth as more new and existing customers transition to this model. He also highlighted an exciting product pipeline, including the launch of Mobi Tubeless (the first extended wear patch pump with a superior algorithm) and the company's progression towards a fully closed-loop system by 2027 or 2028, all contributing to management's confidence in future growth.

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.

Travis Steed asked for clarification on the Q1 revenue guidance (flat to down low single digits), considering the 5-point selling days tailwind and inorganic impacts, and how this bridges to the expected recovery later in the year. He also questioned the new CEO's perspective on balancing short-term versus long-term shareholder value creation and the potential for partnership routes.

Answer

Payman Khales, President and Chief Executive Officer, confirmed that the view of a low single-digit decline in the first half and market growth in the second half of 2026 remains unchanged. He highlighted a 5% tailwind in Q1 and a 5% headwind in Q4 due to year-over-year production days. Mr. Khales emphasized his strong belief in Integer's long-term strategy, focusing on sustainable shareholder value creation by delivering value to customers, and stated no changes are being made to the business approach.

Travis Steed asked for clarification on the Q1 revenue outlook (flat to down low single digits) given the 5-point selling day tailwind, seeking to understand the organic Q1 to Q2 bridge and the impact of one-time factors. He also asked Payman Khales, as the new CEO, about his philosophy on balancing short-term versus long-term shareholder value creation.

Answer

Payman Khales, President and CEO, confirmed the unchanged view of a low single-digit decline in the first half and a return to market growth in the second half of 2026. He highlighted a 5% tailwind in Q1 and a 5% headwind in Q4 due to production days, which normalizes the quarterly profiling. Regarding shareholder value, Mr. Khales emphasized a strong belief in Integer's long-term strategy, focusing on delivering sustainable value to customers as the primary driver for shareholder success.

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 asked about Insulet's updated guidance philosophy, seeking clarity on how the 2026 guidance was set compared to prior years, what is factored in for upside, and expectations for record new starts in Q1.

Answer

Flavia Pease, CFO, stated that the guidance continues to be set with the full intent to deliver, reflecting a balanced outlook. She acknowledged normal seasonality between the fourth and first quarters but expressed confidence in the Q1 and full-year outlook. She indicated that faster advancement of AID penetration could lead to performance closer to the top end of the guidance range.

Travis Steed questioned Insulet's updated guidance philosophy for 2026, asking what factors are baked in for potential upside and if record new starts are anticipated in Q1.

Answer

Flavia Pease (CFO) stated that the guidance is set with the full intent to deliver and reflects a balanced outlook. She acknowledged normal Q1 seasonality but expressed confidence in the provided outlook. Pease indicated that faster-than-anticipated AID penetration would contribute to reaching the higher end of the guidance range.

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 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 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 sought confirmation on whether the street's Q1 2026 revenue model of $27 million was directionally accurate, and if the Q1 gross margin estimate of 54% was also roughly correct. He also asked for a breakdown of the expected step-up in operating expenses as a percentage of sales in 2026, distinguishing between R&D, sales and marketing, and G&A, and how much is pipeline versus sales force expansion.

Answer

Stephen Feider, CFO, confirmed that the $27 million street model for Q1 2026 revenue is "directionally accurate" but declined to comment specifically on quarterly gross margin guidance. He explained that the most notable OpEx expansions would be in sales and marketing (due to sales force growth and direct-to-consumer advertising) and R&D (driven by the bi-hormonal program and Mint), with G&A showing a very mild increase.

Travis Steed asked if the street's Q1 2026 revenue model of $27 million was directionally accurate based on Beta Bionics' expectations. Travis Steed also inquired if the street's Q1 2026 gross margin estimate of 54% was roughly accurate. Travis Steed further asked for a breakdown of the expected step-up in operating expenses as a percentage of sales in 2026, differentiating between R&D, sales and marketing, and G&A, and the drivers (pipeline vs. sales force expansion).

Answer

CFO Stephen Feider confirmed that the $27 million figure for Q1 2026 revenue was 'directionally accurate' but declined to comment specifically on any quarterly guidance related to gross margin. CFO Stephen Feider indicated that the most notable OpEx expansions would be in sales and marketing (due to sales force expansion and direct-to-consumer advertising) and R&D (driven by the bi-hormonal program and Mint), with G&A showing only a mild increase.

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 at Bank of America inquired about Medtronic's strategy for accelerating revenue growth and achieving high single-digit earnings growth in fiscal year 2027, particularly considering tougher comparables for CAS and the current 1% growth in the surgical business.

Answer

Chairman and CEO Geoff Martha highlighted expected acceleration from Symplicity, Altaviva, CST with Stealth Access, and Neurovascular due to new products and anniversarying VBP. EVP and CFO Thierry Piéton detailed the EPS growth algorithm, citing improved gross margins from CAS mix and diabetes separation, G&A leverage, and planned investments in R&D and M&A, while also noting potential dilution from tariffs, the 53rd week, and M&A activities.

Travis Steed asked about Medtronic's commitment to accelerating revenue growth and achieving high single-digit EPS growth for fiscal year 2027, considering tougher comps for CAS and the current 1% growth in the surgical business, particularly with the launch of Hugo.

Answer

Chairman and CEO Geoff Martha highlighted continued strong growth in CAS, the anticipated kick-in of Symplicity for hypertension and UltraViva for overactive bladder, and acceleration in CST with Stealth AXiS and Neurovascular due to new products and anniversarying VBP. EVP and CFO Thierry Piéton reiterated the high single-digit EPS growth guidance for FY2027, citing accelerated growth, improving gross margins from CAS mix and diabetes separation, and disciplined G&A leverage, while acknowledging headwinds from tariffs and M&A dilution.

Travis Steed asked for a breakdown of the implied 6% second-half revenue growth guidance, focusing on the contribution from pipeline products like RDN and the base business, including confidence in a slight rebound in MedSurg. He also questioned whether revenue upside would lead to more significant margin upside in the second half.

Answer

CFO Thierry Piéton explained that early strong order intake and tax upside in Q2 allowed for strategic investments in growth drivers like cardiac ablation and Simplicity, impacting Q2 margin flow-through. He expects SG&A leverage in the second half, with R&D continuing to ramp. Chairman and CEO Jeff Martha detailed that the back-half ramp is largely driven by PFA's momentum, with Simplicity and AltaViva starting to contribute and Hugo expected to gain approval. He also noted improvements in diabetes, neuromodulation, CST, peripheral vascular, and neurovascular.

Travis Steed asked about the implied 6% second-half revenue growth guidance, specifically the assumptions for RDN and the base business, including confidence in a slight rebound for MedSurg. He also questioned the margin flow-through in the second half, expecting revenue upside to translate into greater margin improvement.

Answer

CFO Thierry Piéton explained that early strong order intake and tax upside in Q2 allowed for strategic investments in growth drivers like PFA and Simplicity marketing, leading to higher R&D and SG&A spend. He projected SG&A leverage in H2 and operating margin leverage in FY27, despite tariff impacts. CEO Jeff Martha detailed revenue drivers, emphasizing PFA's strong momentum, Simplicity and AltaViva's expected ramp, and improvements in Diabetes, Neuromodulation, CST, CRM, Peripheral Vascular, and Neurovascular.

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 questioned the rollout of the 15-day product, its expected impact on margins, and its strategic use in opening new international markets, particularly given the ambition for international business to surpass the U.S.

Answer

Jereme Sylvain, CFO of Dexcom, explained that the 15-day product will contribute to U.S. margins this year, with greater impact in future years as the base converts. He highlighted its cost advantage for expanding into emerging international markets. Jake Leach, President and CEO of Dexcom, added that the 15-day wear time will extend globally, noting significant enhancements to G7's reliability, longevity, and accuracy, which has been well-received by users.

Travis Steed asked about the rollout of the 15-Day sensor, its expected impact on margins, and its strategic use in opening new international markets, particularly given the ambition for international business to exceed the U.S.

Answer

Jereme Sylvain, Chief Financial Officer, explained that the 15-Day product will contribute to margins, with greater impact in future years as the base converts. He noted its cost advantage for expanding into new and emerging international markets. Jake Leach, President and CEO, added that the 15-Day wear time will extend globally, and initial user feedback on its longevity, reliability, and accuracy has been excellent, making it Dexcom's most accurate sensor to date.

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 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 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 sought further clarification on modeling Q1 2026, asking for details on expected revenue, gross/operating margin trends (flat or down sequentially), and the percentage of full-year earnings anticipated in Q1 versus the second half. He also inquired about share gain/loss assumptions for infusion pumps in 2026 and if there were any one-time factors contributing to the $50 million sequential increase in OUS Care and Connectivity Solutions.

Answer

EVP and CFO Joel Grade reiterated that Q1 would be particularly challenging due to seasonality, Novum customer behavior uncertainty, pharma margin challenges, absorption headwinds from higher-cost inventory, and increased interest expense, but did not provide specific numerical guidance for Q1. President and CEO Andrew Hider expressed confidence in infusion pump opportunities, citing Spectrum as a workhorse and its synergy with Novum syringe. Grade noted that the OUS Care and Connectivity Solutions business has been performing well with a strong order book and competitive wins, without any specific one-time factors identified.

Travis Steed expressed confusion regarding Q1 2026 modeling, seeking more specific details on expected revenue, gross margins, operating margins, and the percentage of full-year earnings anticipated in Q1 to understand the recovery slope. He also asked about assumptions for infusion pump market share this year and if there were any one-time factors contributing to the $50 million sequential increase in OUS Care and Connectivity Solutions.

Answer

CFO Joel Grade reiterated that Q1 is expected to be the most challenging, citing volume and seasonality impacts, Novum uncertainty, Pharma challenges, absorption headwinds from higher inventory costs, and increased interest expense, but did not provide specific numerical guidance for the quarter. CEO Andrew Hider expressed confidence in Baxter's infusion pump portfolio, particularly Spectrum, and its continued innovation. Mr. Grade clarified that the OUS Care and Connectivity Solutions growth was due to strong business performance, a robust order book, competitive wins, and strong capital spending, with no unusual or one-time items.

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 pathway to obtaining a new CPT code for Inspire 5, including the use of temporary or miscellaneous codes, the impact on physician payment during this transition, and the risk of a lower reimbursement rate with a new code. He also inquired about the company's ability to grow earnings and expand margins in a slower revenue growth environment.

Answer

Tim Herbert (Chairman and CEO) outlined the new Category I CPT code application process, which involves the AMA CPT panel and RUC, with an expected effective date of January 1, 2028. He confirmed that CPT code 64582 will be used in the interim, not temporary codes, and acknowledged the inherent risk of a lower payment from the RUC process. He also emphasized continued cost discipline and spending flexibility to manage earnings and margins.

Travis Steed asked about the pathway to obtaining a new CPT code, specifically whether a temporary or miscellaneous code would be used during the transition, the impact on physician payments, and the risk of lower reimbursement with a new code. He also inquired about Inspire's ability to grow earnings and expand margins in a slower revenue growth environment.

Answer

Tim Herbert, Chairman and CEO, explained that Inspire intends to pursue a new Category I CPT code through the AMA CPT panel and RUC process, with an estimated effective date of January 1, 2028. During this period, the company will continue to use CPT code 64582. Herbert acknowledged the inherent risk that the RUC process could identify a lower payment. Regarding earnings, he emphasized continued cost discipline and flexibility in spending based on insights into the professional fee reduction.

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 asked about the expected cadence of TAVR and total company growth throughout the year, the organic Q1 growth rate considering FX impact, and any recent January trends supporting the guidance. He also inquired about the potential impact of the TAVR NCD reconsideration on growth, such as more centers or faster patient pathways, and how the debate on the care team might shape the final determination.

Answer

Scott Ullem, CFO, stated that FX is expected to provide a $40 million tailwind to full-year 2026 sales, with Q1 reported sales growth approximately 300 basis points higher than underlying growth. Dan Lippis, Global Leader of TAVR, added that H1 2026 growth rates are expected to be higher than H2 due to tougher year-over-year comparisons. Regarding the TAVR NCD, Lippis explained the process (draft in June, final in Q4), anticipating negligible impact in 2026 but more relevance for 2027 and beyond, focusing on timely and equitable access to care and coverage to label.

Travis Steed asked about the expected cadence for TAVR and total company growth throughout 2026, seeking clarity on Q1 organic growth given FX impacts and any insights into January trends. He also questioned the potential impact of the TAVR NCD (National Coverage Determination) on growth, specifically regarding more centers or faster patient pathways, and the debate surrounding care team vs. indication expansion.

Answer

CFO Scott Ullem noted an expected $40 million FX tailwind for full-year 2026 sales, with Q1 reported sales growth projected to be about 300 basis points higher than underlying growth. Dan Lippis, Global Leader of TAVR, explained that 2026's front half would be stronger due to tougher year-over-year comps in the second half. Regarding the TAVR NCD, Lippis stated the formal reopening of the process was important, with a draft expected around June and final determination in Q4 2026, implying negligible impact for 2026 but more relevance for 2027 and beyond. He emphasized ensuring timely and equitable patient access and coverage to label.

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 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 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 cost of the Salesforce transition baked into the margins, why the transition is projected to take two years, and when the company expects to see 'green shoots' or positive outcomes from these efforts.

Answer

Suky Upadhyay, CFO and EVP of Finance, Operations, and Supply Chain, Zimmer Biomet, stated that a modest near-term headwind to operating margins (within SG&A) is accounted for in the 2026 guidance. He emphasized that the mid-to-longer term opportunity involves restructuring, improved productivity (currently half of peers), and enhanced revenue growth, which will provide significant P&L leverage. Ivan Tornos, Chairman, President, and CEO of Zimmer Biomet, explained the two-year timeline is due to a responsible, staged approach across the remaining 1,600 reps in multiple states, segmenting by contract and market status, to ensure a thorough process.

Travis Steed asked about the cost of the sales force transition baked into margins, why the full transition takes two years, and when the company expects to see 'green shoots' or initial benefits from the initiative.

Answer

Suky Upadhyay, CFO and EVP of Finance, Operations, and Supply Chain, stated a modest near-term headwind to operating margins from the sales force transition is incorporated into 2026 guidance, with mid-to-longer term benefits expected. Ivan Tornos, Chairman, President, and CEO, explained the two-year timeline is for a responsible, staged approach across 1,600 remaining reps, with productivity increases expected towards the end of 2027.

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 asked about BD's fiscal 2026 guidance, specifically the Q2 revenue and EPS outlook, the expected step down in Q2, and the overall cadence of revenue and earnings for the full year, including the transition from Q2 to the second half.

Answer

Tom Polen, Chairman, CEO and President, stated that Q1 performance was strong and the Q2 outlook remains fundamentally unchanged. He noted that Q2 reflects modest timing benefits in Biopharma systems and MMS seen in Q1, and that Q1 and Q2 are in line with each other, with no expected ramp from the first half to the second half of the year.

Travis Steed asked about the Q2 revenue and EPS guidance, specifically the step down in Q2, and the assumptions for the full-year cadence from Q2 to the second half for both revenue and earnings.

Answer

Tom Polen, Chairman, CEO and President, and Vitor Roque, Senior Vice President and Interim Chief Financial Officer, explained that Q1 performance was strong and nothing fundamentally changed in the Q2 outlook. They noted that Q2 reflects modest timing benefits in Biopharma Systems and MMS from Q1, and if adjusted, Q1 and Q2 are in line. They emphasized that there is no ramp expected from Q1 to Q2, or from the first half to the second half of the year, which is a better position than the previous year.

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 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 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 (via Gracia) asked for more details on the strength observed in the international market, particularly in EMEA and Latin America, and the factors contributing to the improved outlook and confidence for sustained growth. He also sought quantification of the incremental pricing headwind impacting the U.S. business and how it is factored into the updated revenue guidance range.

Answer

CEO Devdatt Kurdikar attributed international strength to "superior execution" by local teams, including winning a new large customer in Latin America. CFO Jake Elguicze clarified that the shift to the lower end of revenue guidance is due to recent U.S. pricing dynamics. He detailed that contract manufacturing revenue is unchanged, core volumes are now expected to be flattish year-over-year (an improvement from previous guidance), and new product contribution is anticipated at about 50 basis points, offsetting contract manufacturing headwinds. He noted that pricing, initially expected to be flat, is now a headwind.

Travis Steed inquired about the drivers behind the strong performance in Embecta's international markets, specifically EMEA and Latin America, seeking more detail on improvements compared to previous outlooks and the company's confidence in sustaining this momentum. He also asked for quantification of the incremental U.S. pricing headwinds and their impact on the updated fiscal year 2026 guidance range.

Answer

Devdatt Kurdikar, CEO of Embecta Corp, attributed the international strength to 'superior execution,' particularly in Latin America, including securing a new large customer. Jake Elguicze, CFO, elaborated on the pricing headwind, stating that it is the primary reason for expecting revenue guidance to be at the lower end. He clarified that while contract manufacturing revenue remains consistent (down 50 bps) and new product contribution is positive (around 50 bps), core volumes are now expected to be flattish year-over-year due to U.S. stability and improved international performance, contrasting with initial expectations of flat year-over-year pricing.

Travis Steed pressed further on U.S. EP, noting it was flat sequentially while RF competitors showed growth. He asked if anything changed late in Q4, given prior bullishness, and what this implies for the Q1 2026 guidance of 8.5%-10% for EP.

Answer

CEO Michael Mahoney reiterated the belief that the EP market grew 18%-20% in Q4. He acknowledged that with Boston Scientific's dominant PFA market share and new competitors, some share loss was anticipated, but expressed confidence in maintaining clear PFA market leadership by year-end 2026. He attributed the Q1 guidance to tough year-over-year comparisons and an approximate 150 basis point impact from the Acclarent discontinuation and Axios product withdrawal, expecting these issues to resolve by mid-year.

Travis Steed pressed for more details on U.S. EP's sequential flatness, contrasting it with sequential growth from RF competitors, and questioned if any late-quarter changes occurred given prior bullish investor meetings, also asking about implications for the Q1 2026 guide and early 2026 EP performance.

Answer

CEO Michael Mahoney reiterated the Q4 EP market estimate of 18-20% and acknowledged an anticipated, planned loss of some PFA market share due to new competitive launches, given Boston Scientific's dominant position. He expressed confidence in maintaining clear PFA market leadership by year-end 2026 and growing faster than the 15% market. He attributed the Q1 2026 guide of 8.5-10% to tough year-over-year comparisons and the impact of the Acclarent discontinuation and Axios product removal, expecting these issues to ease in the second half.

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 inquired about the key drivers behind the exceptional growth in Stryker's MedSurg business and the company's confidence in sustaining this performance long-term. He also asked about Stryker's M&A strategy for 2026, specifically regarding tuck-in or larger acquisitions, and how the company plans to protect margins with potential deals.

Answer

Kevin Lobo, Chair and CEO, Stryker, attributed MedSurg's growth to high market shares, continuous product upgrades, strategic tuck-in acquisitions, and systematic sales force specialization. He expressed confidence in sustaining this offense. Regarding M&A, Mr. Lobo noted a strong balance sheet and a healthy pipeline for both tuck-ins and adjacencies. Preston Wells, CFO, Stryker, added that tuck-in deals are generally factored into margin expectations and any significant impacts would be communicated.

Travis Steed asked about the drivers behind the strong growth of Stryker's MedSurg business, which he noted is one of the fastest-growing med-tech markets, and the confidence in sustaining this growth long-term. He also inquired about Stryker's M&A strategy for 2026, specifically regarding tuck-ins or potentially larger acquisitions, and how margins would be protected with these deals.

Answer

Chair and CEO Kevin Lobo attributed MedSurg's growth to high market shares, continuous product upgrades, strategic tuck-in acquisitions (like NICO), and systematic sales force specialization. He emphasized this offense is sustainable. Kevin Lobo stated Stryker has a strong balance sheet and a healthy deal pipeline for 2026, including tuck-ins and adjacencies. CFO Preston Wells added that tuck-in deals are generally built into margin expectations, and any significant deals would be communicated with their expected impact.

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 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 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 sought clarification on the approximately $100 million difference in the organic constant currency dollar number between the J.P. Morgan conference slides and the current investor deck, and how the GI business will be reported going forward.

Answer

Todd Garner, EVP and CFO, explained that the difference was due to a change in presentation: previously, the GI impact was subtracted from the total, whereas now the true organic number is presented without GI, and GI sales are shown as a positive. He confirmed that GI will be reported separately going forward.

Travis Steed sought further clarification on the reported organic constant currency dollar number, noting a significant difference from previous presentations, and asked how the GI business would be reported going forward.

Answer

Todd Garner, Executive Vice President and Chief Financial Officer, clarified that the difference in organic dollar numbers stemmed from the change in presentation, with the current figures reflecting the true organic baseline without the GI business, which was previously included. He confirmed that GI revenue would be reported separately going forward.

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 inquired about the FDA approvals for cardiac non-force feedback instruments, their implications, and whether 'new disease states' in 2026 priorities refer to cardiac or other areas. He also asked about incorporating advanced imaging features into the robotic ecosystem, leveraging existing hardware, and potential new revenue streams.

Answer

CEO Dave Rosa explained the foundational work for cardiac surgery, including U.S. clearance for da Vinci 5, ongoing approvals in other regions, future force feedback instruments, training pathways, and cardiac-specific instrumentation. CFO Jamie Samath added that 17,000 cardiac procedures were performed in 2025, growing from a small base, with a robotic opportunity of 160,000 procedures annually in cleared da Vinci 5 geographies. Dave Rosa further detailed advanced imaging capabilities, including new molecules with associated revenue streams and hyperspectral imaging for tissue oxygenation, aiming to improve outcomes.

Travis Steed asked about the FDA approvals for cardiac non-force feedback instruments and their impact on new disease states, specifically cardiac. He also inquired about the strategy for incorporating advanced imaging features into the robotic ecosystem, including hardware requirements and potential new revenue streams.

Answer

CEO Dave Rosa explained the foundational aspects of supporting cardiac surgery, including DV5 clearances, regulatory pathways for force feedback instruments, training, and cardiac-specific instrumentation development, which are multi-year efforts. CFO Jamie Samath added that globally, 17,000 cardiac procedures were performed in 2025, with a da Vinci 5 opportunity estimated at 160,000 procedures per year. Dave Rosa further detailed advanced imaging capabilities, mentioning additional molecules for fluorescence imaging with associated revenue streams, and hyperspectral imaging for tissue oxygenation, which requires software and hardware tuning, aiming to improve outcomes.

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 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 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 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 asked about the macro procedure environment in medtech, particularly concerns regarding ACA subsidies. He also inquired about the expected growth cadence for total Abbott in 2026, specifically if Q1 and the first half would be more in line with Q4 2025 growth before improving in the second half.

Answer

CEO Robert Ford stated that Abbott's Q4 2025 medtech volumes were strong across all categories, indicating no slowdown in the procedure environment. He emphasized the attractiveness of the medtech segment due to innovation and clinical evidence. Regarding growth cadence, Mr. Ford confirmed that Q1 and the first half of 2026 are expected to be more in line with Q4 2025 growth, with improvement anticipated in the second half, also noting the value of looking at growth on a two-year stack basis.

Travis Steed asked about the macro procedure environment in MedTech, addressing concerns about slowing volumes, and sought clarification on the expected growth cadence for total Abbott in 2026, particularly regarding the first half versus the second half.

Answer

Chairman and CEO Robert Ford dismissed concerns about Q4 2025 MedTech volumes, stating Abbott's volumes were 'really good' across all categories, including foundational segments, and expressed surprise if competitors reported slowing volumes. He reiterated confidence in the MedTech segment's attractiveness due to innovation and clinical evidence. Mr. Ford confirmed that Q1/H1 2026 growth for total Abbott is expected to be more in line with Q4 2025, with an anticipated improvement in the second half, aligning with the nutrition business recovery timeline.

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 asked about the company's willingness to accept short-term dilution for long-term value creation within the strategic review, and how it balances these considerations. He also inquired about potential consolidation and antitrust risks in the contact lens space. Additionally, he asked how operating margin leverage is achieved in 2026 given expected gross margin declines, specifically regarding SG&A growth or cuts.

Answer

President and CEO Al White stated that the strategic review involves a serious look at all alternatives to drive long-term shareholder value, without detailing specific short-term impacts. He explained that operating margin leverage is achieved through disciplined cost management, with operating expenses (OpEx) or SG&A not expected to grow significantly, leveraging the recently completed reorganization and prior IT investments.

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 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 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 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 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.

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.