Enovis Corporation Q3 FY2025 earnings call

• Damien emphasized commercial execution, operational excellence (doubling down on EGX), and financial discipline, with a focus on portfolio review including SKU rationalization. - Recon's U.S. segment grew 7% (extremities double-digit), ARG gaining traction, and international Recon up 12% due to Lima integration. - P&R delivered 4% organic growth with strength in certain product areas, and adjusted gross margins improved. - Completed divestiture of Dr. Comfort, which is expected to benefit P&R's growth and margins. - Ben walked through financial details: Q3 sales $549M, up 9% reported, 7% organic; adjusted EBITDA margin 17.3%, down 60 basis points; adjusted EPS $0.75, up 3%; non-cash goodwill impairment of $548M; divestiture of Dr. Comfort to impact Q4 revenue by $15M.

Third quarter revenue grew 9% on a reported basis and 7% organically. Recon business grew 9% organically; in U.S. Recon, extremities saw double-digit growth, ARG is gaining traction, and international Recon grew 12% due to Lima integration. Prevention and Recovery (P&R) delivered 4% organic growth with strength in BoneStim, revenue cycle management, and spine bracing. Adjusted gross margins for P&R increased 110 basis points year-over-year. The divestiture of Dr. Comfort was completed in early October. Recon contributed 9% organic growth, P&R 4% organic growth.

• Updated full-year 2025 revenue guidance to $2.24B-$2.27B (up $5M) with no change to organic growth guidance. - Raised adjusted EBITDA guidance to $395M-$405M (up $3M) inclusive of favorable tariff outlook, solid Q3 results, and divestiture impacts. - Raised adjusted EPS guidance to $3.10-$3.25 (up $0.05). - Tariff situation remains fluid, with $4M paid in Q3 mostly related to P&R, and mitigation plans in place.

• Fluid tariff situation impacting P&L. - Market sentiment impacts including entitlement cuts, government policy, and inflationary concerns affecting procedure volumes. - Potential operational challenges from market dynamics and competitive landscape.

Q: Vik Chopra asked about U.S. revision market slowdown; A: Damien said Q4 procedure volume seems healthy and stable, with factors like entitlement cuts and government policy potentially weighing on volume but currently seeing healthy volumes.

Q: Young Li asked about portfolio management and Arvis Ultra full launch; A: Damien said focused on commercial execution, operational excellence, financial discipline, and Arvis Ultra to launch in Q1-Q2 2026 with go-to-market flexibility.

Q: Allen asked about upside to guide and 2026 positioning; A: Damien said upsides around commercial execution growth levers like account acquisition, penetration, innovation prioritization; Phillip Berry said focus on debt paydown with expected free cash flow momentum in 2026 due to integration and regulation cost step downs.

Q: Vijay Kumar asked about U.S. Hip and Knee and Arvis impact; A: Damien said no impact on implant sales due to Arvis delay, and ecosystem approach for Arvis and implants; Phillip Berry said U.S. Hip and Knee is a growth driver with solid funnels and innovation investment.

Q: Michala asked about Dr. Comfort divestiture margin accretion; A: Phillip Berry said it will give a tailwind to growth and margins, with lower than fleet average margins for that business previously.

Q: Russell Yuen asked about Recon international cross-selling and Arvis momentum; A: Damien said cross-selling and product focus driving international Recon growth, and Arvis innovation contributing to above-market growth.

Q: Danielle asked about price vs volume in new product launches and Hips vs Knees growth; A: Damien said new product launches help mitigate price headwinds; Phillip Berry said U.S. Hip and Knee both growing, with hip expected to accelerate with new launches.

Q: Dane asked about pricing in P&R and Recon extremities; A: Phillip Berry said P&R leverages price to offset tariff impact, ARG in Recon helps convert customers and drive penetration; and mix elements and premium products offset pricing pressure.