Vikramjeet Chopra

Vikramjeet Chopra of Wells Fargo requested an update on the SKU rationalization project's progress and timeline for benefits. He also asked about the outlook for the Dental segment, given recent market softness.

Answer

CFO Wayde McMillan confirmed that Wave 1 of the SKU rationalization, impacting over 3,000 SKUs with minimal financial effect, is underway, while Wave 2 plans for 2025 are still under review. CEO Bryan Hanson addressed the Dental segment, noting that while market softness is a factor, tough year-over-year comps were a larger impact. He highlighted strong demand for the new Clinpro product, which is currently capacity-constrained, as a key focus for the team.

Vikramjeet Chopra requested an update on the SKU rationalization project, including when benefits are expected to materialize. He also asked about the Dental segment, inquiring about expectations for market recovery and growth prospects in 2025.

Answer

CFO Wayde McMillan confirmed that Wave 1 of the SKU rationalization, impacting over 3,000 SKUs with minimal financial effect, is in progress. An update on Wave 2 will be provided closer to year-end. CEO Bryan Hanson addressed the Dental segment, attributing its performance more to tough comps than market softness, though softness is a factor. He noted Solventum is less impacted by elective procedure downturns. He highlighted strong demand for the new Clinpro product, stating the current focus is on increasing production capacity to meet that demand.

Vikramjeet Chopra of Wells Fargo asked about Globus Medical's future investor communication strategy and guidance approach. He also inquired about the launch timeline and integration plan for the recently FDA-cleared Excelsius XR augmented reality headset.

Answer

President & CEO Keith Pfeil stated that the company will be more active on the road and plans to hold an Investor Day in the future. SVP & CFO Kyle Kline added he will be more front and center in investor relations. Regarding Excelsius XR, Pfeil explained that quoting has begun, and the launch will focus on pairing the headset with the Excelsius Hub and E3D imaging system, creating a top-tier navigation package. He highlighted the value proposition of improved surgeon line-of-sight and control.

Vikramjeet Chopra of Wells Fargo questioned if new spine robots from competitors were elongating sales cycles and if financing terms were shifting. He also asked for directional guidance on the 2025 EBITDA margin after factoring in the Nevro deal.

Answer

COO and CFO Keith Pfeil stated that competitor robots were not a primary driver of sales delays, though increased requests for alternative financing options may contribute to longer cycles. He guided for the full-year 2025 adjusted EBITDA margin to be in the 'high 20s,' as the earlier-than-planned closing of the Nevro acquisition would have a slight impact on the company's goal of reaching the 30s.

Vikramjeet Chopra of Wells Fargo inquired about the strategic timing of the Nevro acquisition and whether Globus Medical expects to benefit from a competitor's divestiture of its spine business.

Answer

President and CEO Dan Scavilla explained that the rapid integration of NuVasive created the capacity to pursue the Nevro deal, which is viewed as a well-rounded asset with applications beyond neuromodulation. Regarding market disruption, Scavilla stated that Globus remains focused on its long-term strategy of innovation and enabling technology, and will capitalize on opportunities as they arise without deviating from its core plan.

Vikramjeet Chopra asked about the most durable long-term tariff mitigation strategies and inquired about the performance of the recent augmented reverse glenoid (ARG) system launch and general market trends.

Answer

CEO Matthew Trerotola identified moving product sourcing out of China as the most significant and sustainable tariff mitigation strategy, noting that projects are already being accelerated. He added that the ARG launch is progressing 'terrific' and is a key driver of the company's above-market shoulder growth. He characterized the overall market as having a healthy start to the year, with a particularly strong January and February.

Vikramjeet Chopra inquired about Enovis's M&A strategy for 2025 following the Lima integration and questioned if there was a potential pathway for the Recon segment to achieve double-digit growth.

Answer

CEO Matthew Trerotola stated that 2025 M&A will focus on smaller, strategic bolt-ons while the company deleverages and completes the Lima integration. Regarding Recon growth, he explained that while double-digit growth is possible, the company's strategic goal is a more consistent high single-digit growth, supported by strong exit momentum and ramping cross-selling opportunities.

Vikramjeet Chopra asked about the timeline for Lima-related revenue dis-synergies, inquiring about the expected impact in Q4 and if any would persist into 2025, and also about the growth outlook for the Recon segment next year.

Answer

Chief Financial Officer Phillip Berry stated that the dis-synergy impact would see another step down in Q4 and is expected to be fully cleared by the start of 2025. An executive added that the headwind from the integration will be gone next year, and 2025 guidance will be set considering market growth, execution, and new products.

Vikramjeet Chopra from Wells Fargo asked whether the new tariffs would affect Masimo's long-term operating margin goals and questioned the specifics of the Sound United divestiture, including if the price met expectations and how the proceeds would be used.

Answer

CFO Micah Young expressed confidence in the underlying business's margin expansion, noting Q1's 750 basis point improvement, and stated that tariff mitigation plans are in place. He confirmed the Sound United sale price represented fair market value after a thorough process and that the company is prioritizing share repurchases with the proceeds.

Vikramjeet Chopra asked new CEO Katie Szyman about her key priorities for the next three months and questioned CFO Micah Young on whether the raised 2025 operating margin guidance represents a pull-forward of future savings or a change to the long-term target.

Answer

CEO Catherine Szyman stated her priorities are to develop a long-term growth strategy, get to know the team, and meet with customers and partners to listen and learn. CFO Micah Young deferred commenting on long-term targets until a new plan is developed with the CEO, but affirmed the business has strong leverage capabilities and sees significant future potential in gross margin expansion.

Vikramjeet Chopra asked about the confidence in the updated guidance and the factors that would lead to results at the high versus low end. He also inquired about the 2025 outlook for Masimo's end markets, including potential headwinds and tailwinds.

Answer

CFO Micah Young expressed confidence in the guidance, stating that for healthcare, hitting the high end depends on a strong flu season and hospital census, with strength expected from the rainbow and brain monitoring platforms. For non-healthcare, the guidance was de-risked but reflects historical seasonality. Looking to 2025, Young sees a strong healthcare market supported by record contracting, while the consumer market is stabilizing and expected to benefit from new product launches.

Vikramjeet Chopra of Wells Fargo & Company asked CEO Mojdeh Poul about her key observations and surprises after her first quarter, focusing on both positive and negative aspects. Chopra also inquired about the company's strategy for satisfying the convertible note maturing in August 2025.

Answer

CEO Mojdeh Poul stated that the company's supply chain and quality challenges were not a surprise, but she identified significant opportunities to improve execution and enterprise-wide prioritization, leading her to establish a new transformation and program management office. CFO Lea Knight confirmed the plan is to use the company's revolver to satisfy the maturing convertible note and utilize a swap portfolio to fix the interest rate on over half of the outstanding debt at a low 3% rate through 2027.

Vikramjeet Chopra inquired about new CEO Mojdeh Poul's key strategic initiatives for 2025, the timeline for a new Long-Range Plan (LRP), and the company's exposure to potential tariffs on goods from Mexico and Canada.

Answer

CEO Mojdeh Poul outlined three priorities: operational excellence, core business growth, and new product innovation. She stated that assessing the business for a new LRP will take much of 2025. Regarding tariffs, she noted Integra sources components, but has no manufacturing plants in Mexico or Canada, and is assessing potential impacts.

Vikramjeet Chopra asked about the potential for hurricane-related procedure deferrals, the impact of IV shortages on surgeries, and sought confirmation of the expected $10 million Q4 impact from shipping holds.

Answer

CEO Jan De Witte confirmed no significant impact from hurricanes or IV shortages. CFO Lea Knight reaffirmed that the Q4 financial impact from the previously disclosed shipping holds is still expected to be approximately $10 million, significantly less than the Q3 impact.

Vikramjeet Chopra requested details on the percentage of products sourced from Mexico, China, and the EU. He also asked if customers were delaying capital equipment purchases due to the macroeconomic environment.

Answer

CEO Stanley Bergman explained that sourcing from Mexico is minimal and that the company has been actively rebalancing its supply chain away from China for some time, for example by moving glove sourcing to Malaysia. CFO Ron South addressed the equipment question, stating that the company has not seen any adverse reaction from the market, with equipment orders remaining in line with expectations and demand characterized as 'healthy'.

Vikramjeet Chopra asked for details on the expected P&L impact from tariffs in 2025, product sourcing locations, and an update on the company's robotics launch plans.

Answer

Executive J. Koning stated that the tariff impact is estimated to be in the low single-digit millions on COGS, occurring mainly in the second half of 2025 and limited to EOS units imported from France. Executive Patrick Miles added that the robotics platform launch is on schedule for the end of the year. He stressed the focus is on perfecting the integrated workflow with navigation to ensure it enhances, rather than slows, surgical efficiency.

Vikramjeet Chopra inquired about the potential benefits from a competitor's recent sale of its U.S. spinal implants business and asked for details on ATEC's international expansion plans for 2025, particularly regarding its recent entry into Japan.

Answer

Patrick Miles (Executive) explained that market disruption creates opportunity and that ATEC is well-positioned with its unique informatics platform to attract sales talent. Regarding Japan, he emphasized a disciplined, long-term strategy focused on establishing a strong clinical beachhead with lateral surgery before expanding, noting the market's receptiveness to progressive techniques.

Vikramjeet Chopra from Wells Fargo asked about management's preference between a sale and a spin-off for NewCo and what the market might be missing regarding the Biotronik acquisition, given the initial negative reaction.

Answer

CEO Liam Kelly explained he is agnostic between a sale or spin, emphasizing the goal is maximizing shareholder value and that the high level of inbound interest validates the assets' quality. Regarding Biotronik, he suggested the Street misunderstands the portfolio's value, citing specific product combination opportunities (e.g., Ringer catheter) and the strategic benefit of an enhanced cath lab channel and R&D capabilities.

Vikramjeet Chopra inquired about Align's plans to mitigate potential tariff impacts, such as shifting production or implementing price increases, and also asked for a preview of the upcoming Investor Day.

Answer

President and CEO Joe Hogan stated that Align is well-positioned with its global manufacturing footprint, including facilities in China for the local market, Mexico for the U.S., and Poland for Europe. He expressed confidence in the company's ability to mitigate tariff effects and maintain its margin commitments. Regarding the Investor Day, Hogan said attendees can expect a comprehensive look at the company's portfolio, technology, commercial strategy, and outlook for the next few years.

Vikramjeet Chopra of Wells Fargo requested more detail on the initiative to more than double Project CARE implants and referrals in 2025, asking what specific milestones to watch for. He also asked for a follow-up on the key assumptions that would drive revenue to the high end of the 2025 guidance range.

Answer

Executive Joel Becker explained the Project CARE expansion involves new educational programs, targeted DTC efforts, and tracking key metrics like expanding the number of total centers, implanting centers, and programming centers. To reach the high end of guidance, he reiterated the importance of growing the number of active prescribers in Level 4 centers, accelerating the CARE program expansion, achieving a strong return on DTC marketing, and maintaining growth from DIXI Medical products.

Vikramjeet Chopra pointed out that the Q4 guidance implies a sequential revenue decline, which is historically atypical, and asked if this was due to conservatism or a pull-forward of sales into Q3. He also asked how investors should model the impact of Project CARE in 2025.

Answer

Executive Joel Becker stated there was no clear evidence of sales being pulled forward into Q3. He explained that the Q4 forecast accounts for fewer selling days due to the large AES medical meeting and holidays. For 2025, Becker positioned Project CARE as a key growth layer that will be expanded on top of the core business in Level 4 centers, with potential indication expansion adding a third layer of growth.

Vikramjeet Chopra, on behalf of Wells Fargo, asked about the potential impact of tariffs on Mexico and Canada, questioning Zimmer Biomet's manufacturing footprint and operational flexibility.

Answer

President and CEO Ivan Tornos and CFO Suketu Upadhyay clarified that Zimmer Biomet has no manufacturing facilities in Mexico or Canada, with two-thirds of its manufacturing based in the U.S. While some third-party supply comes from Mexico, they confirmed that the potential impact from any recently announced tariffs is already incorporated into the company's financial guidance.

Vikramjeet Chopra of Wells Fargo Securities asked for updated thoughts on M&A, including areas of interest and why more deals haven't occurred despite lower market valuations.

Answer

CEO Ivan Tornos stated that while Zimmer Biomet does not need to do deals to achieve its mid-single-digit growth target, the company is actively evaluating opportunities. He emphasized that deals must make both strategic and financial sense, mentioning interest in high-growth segments within Recon, S.E.T., and the ASC space.

Vikramjeet Chopra of Wells Fargo asked what specific factors would drive financial results toward the high or low end of the 4-6% revenue guidance range. He also inquired about the company's capital allocation priorities and M&A strategy for 2025.

Answer

CFO Todd Garner suggested there is 'more upside than downside' to the guidance, as it is based on carrying over the disappointing performance from 2024. Regarding capital allocation, he stated the primary goal is debt reduction to achieve a leverage ratio below 3.0x by year-end. However, he noted they would remain open to a 'really compelling' M&A opportunity.

Vikramjeet Chopra asked what factors could drive results to the high or low end of the 2025 revenue guidance and requested commentary on the current dental capital equipment environment.

Answer

CEO Paul Keel stated that reaching the high end of the revenue guidance would depend on outperformance from Spark, implants, or a faster-than-expected recovery in diagnostics. Regarding capital equipment, he noted that while DSOs are a strong market, the broader category remains sensitive to high interest rates, and a significant demand inflection would likely require cheaper financing.

Vikramjeet Chopra from Wells Fargo inquired about the forward trajectory of the dental market and visibility into a recovery in 2025. He also asked about any business impact from recent hurricanes.

Answer

CEO Paul Keel stated that while long-term dental market growth is expected to be in the 3-5% range, there isn't enough evidence for an imminent upturn, with patient traffic and case starts remaining flat. He acknowledged the difficulty for customers affected by hurricanes but noted it was not a material financial impact for the global business.