Executive Summary

Q1 2025 delivered net sales of $558.8M (+8.2% y/y reported; +9.3% comparable) and adjusted EBITDA of $99.2M (17.7% margin), with adjusted EPS of $0.81; revenue was essentially in line with consensus while EPS beat by ~$0.07, driven by Recon mix and productivity . Revenue estimate: $558.9M*; EPS estimate: $0.74*.
Management raised FY2025 revenue guidance to $2.22–$2.25B but lowered adjusted EBITDA to $385–$395M and adjusted EPS to $2.95–$3.10 due to ~$20M tariff impact; depreciation and interest expense ranges were reduced, FCF outlook remains positive .
Segment performance remained strong: Recon grew 11.3% y/y to $286.3M; P&R grew 5.2% y/y to $272.6M (comparable growth: Recon +11.5%, P&R +7.0%) .
CEO transition announced: Damien McDonald to become CEO effective May 12, 2025; company reiterated Q1 ranges ahead of the print—an added leadership/catalyst element .

What Went Well and What Went Wrong

What Went Well

Recon outperformed: 11.3% reported growth (+13% constant-currency comparable), with double-digit growth in U.S. hips, knees, and extremities; channel integration “fully behind us” . “We delivered comparable growth of 13%… U.S. Recon grew 11%… hips and knees… extremities” .
Margins expanded: adjusted gross margin reached 61.7% (+300 bps y/y) and adjusted EBITDA margin rose +160 bps y/y to 17.7%, supported by mix and EGX productivity . CFO: “positive business mix… momentum from EGX initiatives… adjusted EBITDA grew 19%” .
New products gaining traction: ARG shoulder, Arvis enabling tech, nebulous hip stem, and surgical impactor are ramping; management expects a “multiyear cadence of meaningful NPI” .

What Went Wrong

Tariffs: ~$40M 2025 exposure, with plans to mitigate to ~$20M; majority in P&R, prompting SKU rationalization and sourcing shifts; guidance lowered for EBITDA/EPS accordingly .
GAAP loss persisted: Q1 GAAP EPS was -$0.98, reflecting non-GAAP adjustments including a $35.8M royalty interest charge and $12.1M inventory step-up, though adjusted EPS was $0.81 .
Cash flow seasonality: Q1 operating cash flow of -$1.6M required revolver usage; management reiterated confidence in positive FY FCF and leverage exiting at ~3.0–3.5x .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$505.2	$561.0	$558.8
Adjusted EPS ($USD)	$0.73	$0.98	$0.81
GAAP EPS ($USD, Cont. Ops)	$(0.61)	$(12.06)	$(0.98)
Adjusted EBITDA ($USD Millions)	$90.2	$112.9	$99.2
Adjusted EBITDA Margin %	17.9%	20.1%	17.7%
GAAP Gross Margin %	56.7%	54.8%	59.5%
Adjusted Gross Margin %	58.9%	60.1%	61.7%

Note: Minor rounding variance in Q1 GAAP gross margin between sources (59.4–59.5%) .

Actual vs S&P Global Consensus

Metric	Q3 2024 Estimate*	Q3 2024 Actual	Beat/Miss	Q4 2024 Estimate*	Q4 2024 Actual	Beat/Miss	Q1 2025 Estimate*	Q1 2025 Actual	Beat/Miss
Revenue ($USD Millions)	$504.5*	$505.2	In line	$555.1*	$561.0	Beat	$558.9*	$558.8	In line
Primary EPS ($USD)	$0.61*	$0.73	Beat	$0.92*	$0.98	Beat	$0.74*	$0.81	Beat

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q1 2025 GAAP)

Segment	Q1 2025 ($M)	Q1 2024 ($M)	y/y Growth
U.S. Bracing & Support	$115.1	$104.6	10.1%
U.S. Other P&R	$66.6	$66.4	0.4%
International P&R	$90.9	$88.1	3.2%
Total Prevention & Recovery	$272.6	$259.0	5.2%
U.S. Reconstructive	$137.9	$123.7	11.4%
International Reconstructive	$148.4	$133.5	11.1%
Total Reconstructive	$286.3	$257.3	11.3%
Total Company	$558.8	$516.3	8.2%

Key KPIs (Q1 2025)

KPI	Value
Comparable Sales Growth (Total)	9.3%
Constant Currency Comparable Growth (Total)	10.4%
Recon Comparable Growth	11.5% (13.0% xFX)
P&R Comparable Growth	7.0% (7.9% xFX)
Additional Selling Days Benefit	~350 bps
FX Headwind (Q1)	~120 bps

Non-GAAP Adjustment Highlights (Q1)

Purchase of royalty interest charge: $35.8M .
Inventory step-up and PPE step-up depreciation: $12.7M (incl. $12.1M inventory step-up, $0.6M PPE) .
Amortization of acquired intangibles: $41.8M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2025	$2.19–$2.22	$2.22–$2.25	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	$405–$415	$385–$395 (includes ~$20M tariff impact)	Lowered
Adjusted EPS ($USD)	FY 2025	$3.10–$3.25	$2.95–$3.10	Lowered
Depreciation ($USD Millions)	FY 2025	Prior guide	$120–$125 (lowered by ~$5M)	Lowered
Interest Expense ($USD Millions)	FY 2025	Prior guide	$38–$42 (lowered by ~$4M)	Lowered
Tax Rate	FY 2025	Unchanged	Unchanged	Maintained
Share Count	FY 2025	Unchanged	Unchanged	Maintained
Free Cash Flow	FY 2025	Positive	Positive	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Tariffs/Macro	Not a focal point	Not a focal point	~$40M exposure; mitigate to ~$20M; >90% in P&R	Headwind intensifying; mitigation in-flight
New Product Introductions	“Robust lineup” to drive growth	“Key launches positioned to drive above-market growth”	ARG shoulder, Arvis enabling tech, nebulous hip & impactor ramping	Ramping; multi-year cadence
Recon Growth & Integration	Return to above-market growth	Exceeded year-1 Lima plans	Channel integration “fully behind us”; global double-digit growth	Integration completed; sustained strength
Pricing Environment	N/A	N/A	Recon pricing modestly down; P&R flattish; mix offsets	Mild pricing pressure in Recon
Cash Flow & Leverage	Positive trajectory in 2024 outlook	FCF generation; balance sheet noted	Q1 seasonal trough; FY positive FCF; exit leverage ~3.0–3.5x	Seasonal improvement expected
Enabling Tech/AI-like Guidance	Not detailed	Not detailed	Arvis guidance, 360 and gap balancing coming	Expansion in surgical enabling tech

Management Commentary

CEO perspective: “We had a strong start to the year… adjusted EBITDA margins expanded by 160 bps, reflecting the mix impact of Recon, stable pricing trends and EGX-driven productivity improvements” .
CFO details: “First quarter sales of $559M… ~120 bps currency headwinds and ~350 bps benefit from additional selling days… adjusted gross margins of 61.7%… adjusted EBITDA margin 17.7%” .
Tariff plan: “We expect $40M of 2025 tariff exposure that we have clear plans to mitigate to $20M… mostly Class 1 products… shift procurement/production to other geographies; transition at least 50% by mid-2026” .
Leadership transition: “Damien McDonald… will lead the company to compounding value creation… transition is smooth even with the dynamic tariff backdrop” .

Q&A Highlights

Tariff mitigation durability: Management emphasized accelerating sourcing shifts from China and resourcing strategies to reduce exposure sustainably over time .
Gross margin sustainability: Mix enrichment in Recon and EGX productivity support sustained gross margin strength; tariffs may be a H2 headwind .
Seasonality and FCF: Q2 expected to progress within prior H1/H2 pattern; positive FCF in FY; exit leverage targeted at ~3–3.5x .
Product cadence: Strong momentum in ARG shoulder, enabling tech (Arvis), knee revisions and hip products; controlled launches ramping through 2025 .
Pricing: P&R flattish pricing; Recon facing modest downward pricing pressure, offset by mix from new products .

Estimates Context

Q1 2025: Revenue $558.8M vs $558.9M* estimate (in line); Adjusted EPS $0.81 vs $0.74* (beat) . Values marked with * retrieved from S&P Global.
Prior quarters: Q4 2024 revenue beat ($561.0M vs $555.1M*), EPS beat ($0.98 vs $0.92*); Q3 2024 revenue in line ($505.2M vs $504.5M*), EPS beat ($0.73 vs $0.61*). Values marked with * retrieved from S&P Global.

Where estimates may need to adjust:

Lowered FY adjusted EBITDA/EPS guidance due to tariffs suggests downward revisions to H2 profitability; revenue raise on FX stabilization and organic growth likely drives modest upward revenue revisions .

Key Takeaways for Investors

Mix-driven margin strength continues: Adjusted gross margin at 61.7% and EBITDA margin up +160 bps y/y—supported by Recon growth and EGX productivity—offsets pricing pressure in Recon .
Tariffs are the swing factor in H2: ~$40M exposure with ~$20M mitigation embedded in guide; expect ongoing updates as supply chain shifts execute; watch P&R SKU rationalization and sourcing moves .
Revenue trajectory intact: FY revenue raised to $2.22–$2.25B on FX and steady organic growth (6–6.5%); Q1 revenue in line with consensus, EPS beat indicates cost/mix execution .
Cash flow to improve post-Q1 seasonality: Despite Q1 operating cash flow of -$1.6M, management reiterated positive FY FCF and exit leverage ~3.0–3.5x—monitor conversion as integration/MDR spend abates .
Product cycle supports above-market Recon growth: ARG shoulder, Arvis enabling tech, hip launches underpin multi-year cadence; international cross-selling momentum continues .
Leadership transition adds a narrative catalyst: Damien McDonald’s appointment brings large-cap medtech experience; near-term continuity supported by reiterated Q1 ranges and strong operational foundation .
Positioning: Near-term, stock reaction should key off revenue raise vs EBITDA/EPS cut (tariff overhang); medium-term thesis hinges on successful tariff mitigation and continued Recon-driven mix expansion .

Enovis CORP (ENOV)·Q1 2025 Earnings Summary