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EC

Enovis CORP (ENOV)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 results modestly beat Street on revenue and EPS and included a large, non-cash goodwill impairment (GAAP loss) while non-GAAP profitability remained solid; revenue $548.9M (+8.6% y/y) and Adjusted EPS $0.75 vs S&P Global consensus $0.65; GAAP EPS was $(9.99) due to a $548M impairment . EPS/Revenue consensus from S&P Global; see Estimates Context.
  • Reconstructive led growth (+11.7% reported; +9.2% constant currency), with double‑digit extremities and strong international momentum from Lima integration; P&R grew +6.1% reported (+4.3% cc) .
  • FY25 outlook raised for Adjusted EBITDA ($395–$405M from $392–$402M) and Adjusted EPS ($3.10–$3.25 from $3.05–$3.20); revenue narrowed to $2.24–$2.27B (includes ~$15M Q4 headwind from Dr. Comfort divestiture) .
  • Management highlighted tariff headwinds ($4M in Q3; ~$10M YTD; ~50 bps Q3 EBITDA margin impact) and a ~4% Q4 selling‑days headwind, but reiterated healthy procedure volumes and confidence into 2026 product cadence (ARVIS Ultra broad launch 1H26) .

What Went Well and What Went Wrong

  • What Went Well
    • Reconstructive strength: US recon +6.8% and International recon +17.1% y/y; extremities “double‑digit growth,” ARG gaining traction; international growth benefiting from Lima cross‑sell synergies .
    • Mix and execution lifted margins: GAAP gross margin +320 bps y/y to 59.9% and Adjusted gross margin +140 bps y/y to 60.3% on product/geographic mix and productivity actions (EGX) .
    • Non‑core divestiture: Sale of Dr. Comfort for up to $60M (incl. $45M upfront) sharpens P&R focus and is modestly accretive to growth/margins while aiding deleveraging .
  • What Went Wrong
    • GAAP optics: Non‑cash goodwill impairment ($548.4M) drove GAAP net loss $(570.9)M and GAAP EPS $(9.99) in Q3, overshadowing otherwise solid operational performance .
    • Tariffs and planned investments pressured EBITDA margin: Adjusted EBITDA margin 17.3% (–60 bps y/y) on planned R&D, expense phasing, and tariffs (≈50 bps headwind in Q3) .
    • ARVIS capital sales comp: US hip/knee capital comp from 2024 and pause in ARVIS system sales ahead of Ultra launch weighed on capital; mgmt does not see implant impact but near‑term headwinds persist .

Financial Results

Quarterly trend vs prior year and prior quarters (oldest → newest)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)$505.2 $558.8 $564.5 $548.9
GAAP Gross Margin %56.7% 59.5% 59.3% 59.9%
Adj. Gross Margin %58.9% 61.7% 60.5% 60.3%
Adjusted EBITDA ($M)$90.2 $99.2 $97.2 $94.8
Adjusted EBITDA Margin %17.9% 17.7% 17.2% 17.3%
Adjusted EPS ($)$0.73 $0.81 $0.79 $0.75
GAAP EPS ($)—$(0.98) $(0.64) $(9.99)

Q3 2025 vs S&P Global consensus

MetricConsensusActualSurprise
EPS (Primary)$0.65*$0.75 +$0.10 (Beat)
Revenue ($M)$538.6M*$548.9M +$10.3M (Beat)

Values marked with * retrieved from S&P Global.

Segment breakdown – Q3 2025 vs Q3 2024 (reported and constant currency)

SegmentQ3 2024 ($M)Q3 2025 ($M)Reported GrowthConstant Currency Growth
Prevention & Recovery – US Bracing & Support123.0 127.0 3.2% 3.2%
Prevention & Recovery – US Other P&R66.2 71.4 7.9% 7.9%
Prevention & Recovery – International85.0 92.6 8.8% 3.1%
Total Prevention & Recovery274.2 290.9 6.1% 4.3%
Reconstructive – US120.8 129.0 6.8% 6.8%
Reconstructive – International110.2 129.0 17.1% 11.9%
Total Reconstructive231.0 258.0 11.7% 9.2%
Total Company505.2 548.9 8.6% 6.5%

KPIs and other operating metrics

KPIQ3 2025Context
Organic Growth+7% overall; Recon +9%; P&R +4% Balanced momentum
Free Cash Flow“Nearly $30M” in Q3 (management) Commentary
Tariffs~$4M paid in Q3; ~$10M YTD; ~50 bps EBITDA margin headwind in Q3 Primarily P&R

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2025$2.245–$2.275B $2.24–$2.27B (incl. ~$15M divestiture impact) Narrowed/lowered midpoint (divestiture)
Adjusted EBITDAFY2025$392–$402M $395–$405M Raised
Adjusted EPSFY2025$3.05–$3.20 $3.10–$3.25 Raised
Organic GrowthFY2025Unchanged commentary Unchanged commentary Maintained
D&A, Interest, Tax Rate, Share CountFY2025—No change to outlook Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Tariffs and inflationFY25 outlook in Q1 incorporated ~$20M tariff impact ; no explicit update in Q2 PR$4M in Q3; ~$10M YTD; ~50 bps EBITDA hit in Q3; mitigation actions ongoing Headwind persists but mitigation in progress
ARVIS (enabling tech)Delay referenced from prior quarter; launch timing recalibration ARVIS Ultra showcased; broader launch targeted 1H26; positive surgeon feedback Product cadence intact; 2026 catalyst
Recon growth driversQ1/Q2: double‑digit recon growth; innovation cadence (Nebula, OrthoDrive) Extremities double‑digit; US implants +6%; international +12% with Lima cross‑sell Sustained above‑market recon growth
Portfolio shaping—Dr. Comfort divested (up to $60M; $45M upfront); accretive to growth/margins; debt reduction Streamlining; focus on core
Procedure volumes/macro—Markets “healthy and stable”; acknowledged policy/inflation risks Stable backdrop
Pricing/mix dynamics—ASC mix pressures offset by premium products (ARG, revisions) and pricing in P&R (tariff mitigation) Mixed: pricing headwinds balanced by mix/innovation

Management Commentary

  • “We delivered solid results in the third quarter… Execution was driven by double‑digit growth in extremities and consistent performance across Prevention & Recovery.” — CEO Damien McDonald .
  • “Adjusted gross margins increased… driven by favorable mix, ongoing productivity in manufacturing and supply chain, and slightly offset by tariff impacts.” — CFO Ben Berry .
  • “Surgeon response to ARVIS Ultra was outstanding… lighter, faster, adds capabilities… tracking for a broader launch in the first half of 2026.” — CEO Damien McDonald .
  • On Dr. Comfort divestiture: “Sharpen[s] our focus on core P&R markets… positions Enovis to expand margins, enhance profitability, and accelerate debt reduction.” — CEO Damien McDonald .

Q&A Highlights

  • Volume backdrop: Management sees Q4 procedure volumes “healthy and stable” despite macro risks; not guiding 2026 yet but sees potential for high‑single‑digit recon growth over time .
  • Tariffs and Q4 setup: ~$10M YTD tariffs; ~50 bps Q3 EBITDA headwind; ~4% Q4 selling‑days headwind; modest divestiture drag also embedded .
  • ARVIS impact: No observed implant sales impact from ARVIS delay; expect ecosystem to drive implants when ARVIS Ultra launches; US hip/knee funnels solid .
  • Foot & ankle: Rebound in foot/ankle volumes; strong order book post‑AOFAS; expected to contribute to growth .
  • Dr. Comfort accretion: Modest tailwind to growth/margins as it was below fleet average; restabilized in 2025 .

Estimates Context

  • Q3 2025 results beat S&P Global consensus on EPS ($0.75 vs $0.65) and revenue ($548.9M vs $538.6M). Management also raised FY25 Adjusted EBITDA and EPS guidance despite tariff and divestiture headwinds, suggesting upward bias to forward EPS revisions if execution sustains .
  • Coverage breadth: 10 estimates for EPS and revenue in Q3; target price consensus ~$48 across 9 estimates*.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Broad‑based growth with recon outperformance, higher gross margins, and EPS/revenue beats despite tariff drag; GAAP loss driven by non‑cash goodwill impairment that doesn’t affect liquidity/covenants .
  • Guidance raised: FY25 Adjusted EBITDA and EPS raised while revenue narrowed to reflect Dr. Comfort sale; setup for continued deleveraging as cash flow improves .
  • 2026 catalysts: ARVIS Ultra 1H26 broad launch plus Nebula and OrthoDrive ramp underpin recon trajectory; no implant impact from current ARVIS pause reported .
  • Watch tariffs and Q4 mechanics: ~4% selling‑days headwind and tariff read‑through may limit typical Q4 step‑up; mitigation actions ongoing .
  • International synergy: Lima integration driving strong international recon growth; continued cross‑sell momentum should support above‑market growth abroad .
  • Portfolio focus: Dr. Comfort divestiture simplifies P&R and is modestly accretive to growth/margins; proceeds support debt reduction .
  • Trading lens: Narrative supports multiple stabilization as execution offsets macro/tariff noise; near‑term volatility possible on GAAP optics and Q4 calendar headwind, but FY25 guide raise and 2026 pipeline are constructive .