The paragraph is an introduction to the Teleflex Fourth Quarter 2024 Earnings Conference Call. It includes a welcome note from the operator, introducing the call's participants and explaining the structure of the call. Lawrence Keusch, Vice President of Investor Relations and Strategy Development, mentions that the press release and accompanying slides are available on their website. He introduces the speakers: Liam Kelly, Chairman, President, and CEO; Thomas Powell, Executive Vice President and CFO; and John Deren, Corporate Vice President and Chief Accounting Officer. The paragraph also includes a disclaimer about forward-looking statements and potential risks or uncertainties. The call will conclude with a Q&A session.

Liam Kelly announced a leadership transition at Teleflex, with Tom Powell, the Executive Vice President and Chief Financial Officer, planning to retire on April 1, 2025. Tom has significantly contributed to the company's growth over 13 years, notably improving operating margins and building a strong finance team. He will remain as a consultant for another year to ensure a smooth transition. John Deren will succeed Tom as CFO starting April 2, 2025. The fourth quarter financial results showed Teleflex revenues at $795.4 million, a year-over-year increase, with strong performances in Interventional and Surgical segments. However, adjusted constant currency revenues fell short of expectations.

The paragraph addresses a decline in revenue due to reduced hospitalizations affecting the Vascular business unit and the influence of Interventional Urology. Despite this, adjusted earnings per share grew by 15.1% in the fourth quarter. Thomas Powell, a retiring CFO with over 20 years of experience, reflects on his career and decision to retire, expressing confidence in his successor, John Deren, chosen after a comprehensive search process. Powell will continue to consult for Teleflex until March 2026 to ensure a smooth transition. The adjusted gross margin for the quarter remained flat at 60.1%, with gains from acquisitions, product mix, and pricing being negated by inflation and foreign exchange impacts.

In the fourth quarter, the adjusted operating margin increased to 27.6%, up 130 basis points from the previous year, due to controlled spending and reduced operating expenses as a percentage of sales. For 2024, adjusted constant currency revenues rose by 3.1%, and adjusted earnings per share reached $14.01. The Interventional and EMEA businesses showed strong performance with growth of 14.8% and 7.3%, respectively, while Surgical achieved 6.1% growth, backed by contributions from the Titan Stapler. Interventional Urology revenue grew by 3.7%, with growth in Palette offsetting declines in UroLift. The adjusted gross margin expanded by 120 basis points, and the adjusted operating margin grew by 60 basis points, aided by the termination of the MSA, the acquisition of Palette, and favorable pricing. Cash flow from operations increased by 24.7% to $638.3 million, driven by better operating performance and working capital improvements, along with a $37 million benefit from the termination of the U.S. pension plan. The net leverage at the end of the quarter was approximately 1.5 times.

The paragraph discusses Teleflex's financial activities and future outlook. In the fourth quarter of 2024, the company recognized a $240 million noncash goodwill impairment charge for its Interventional Urology North America unit due to prolonged revenue challenges and competitive pressures. John Deren, the new Chief Financial Officer, announced a $300 million accelerated share repurchase program starting February 28, 2025, expected to complete in the second quarter of 2025. This program is part of a broader $500 million share repurchase initiative authorized in July 2024. Looking ahead, Teleflex anticipates a 1% to 2% adjusted constant currency growth for 2025, excluding a $13.8 million negative impact from a 2024 measure in Italy.

The company anticipates a $55 million revenue headwind in 2025 due to foreign exchange rates, specifically the euro to dollar exchange. The Interventional Urology division is expected to face challenges, particularly with UroLift, while the OEM business is experiencing temporary customer order delays and a contract loss, leading to negative growth. The surgical business in China will be impacted by volume-based procurement. Adjusted earnings per share for 2025 are projected between $13.95 and $14.35, with revenue and EPS expectations set at realistic low-end estimates. The guidance includes adjusted gross and operating margins, net interest expense, and an adjusted tax rate, considering an accelerated share repurchase. Tariffs on U.S. imports from Mexico are factored into the guidance, but not newly proposed tariffs. The interest expense will be revised post a Vascular Intervention acquisition.

The paragraph discusses the potential negative impact of tariffs on medical device products, which could affect financial results and 2025 guidance. It mentions a projected revenue decline in the first quarter of 2025, largely due to foreign currency exchange rates and previous market challenges. The focus then shifts to Teleflex's strategic framework emphasizing sustainable revenue growth and margin expansion. Teleflex announces its agreement to acquire BIOTRONIK SE & Co. KG's Vascular Intervention business for approximately EUR 760 million. This acquisition aims to enhance Teleflex's interventional portfolio, scale operations, and maintain healthy growth by expanding its presence in the cath lab.

The paragraph discusses Teleflex's strategic rationale for acquiring a comprehensive portfolio of vascular intervention devices, which will complement their existing percutaneous coronary intervention products. This acquisition is similar to their previous purchase of Vascular Solutions in 2017 and is expected to enhance their presence in both the coronary and peripheral interventional markets. Teleflex aims to leverage the acquired devices to strengthen their market position and expand their procedure offerings, especially in the rapidly growing peripheral intervention market. Investment in research and development will remain crucial to capitalize on the increased scale, and the acquisition will enable Teleflex to advance their technology and participate in innovative coronary strategies, including drug-coated balloons and resorbable scaffold technologies.

The acquisition will provide Teleflex with new sales channels and opportunities to expand its product portfolio and presence, particularly in the U.S. and Europe. By acquiring the Vascular Intervention business, Teleflex aims to enhance its innovation pipeline and bring new products to market, focusing on competitive interventional products and new technologies like the resorbable metallic scaffold. This acquisition also allows Teleflex to invest in clinical trials for BIOTRONIK Freesolve, a cutting-edge scaffold technology, with potential benefits in interventional coronary and endovascular procedures. Overall, the acquisition is expected to strengthen Teleflex's product development and improve patient care.

The paragraph discusses Freesolve's clinical advancements and upcoming acquisition plans. Freesolve has shown promising results in the BioMAG-1 study and recently received CE mark approval for its coronary stenosis treatment. A follow-up study, BIOMAG-2, is underway with results anticipated in 2027. The acquisition of BIOTRONIK products is expected to close by Q3 2025, contingent on regulatory approvals. These products have shown a revenue growth of 5.4% since 2022 and are projected to generate EUR91 million in Q4 2025. The acquisition is expected to result in a 6% revenue growth from 2026 onwards, though initially diluting Teleflex's operating margins due to investments. However, it is expected to become increasingly accretive to earnings per share and deliver double-digit returns by the fourth year after closing.

The paragraph outlines Teleflex's plans to acquire the BIOTRONIK Vascular Intervention business using a new term-loan, existing credit facility, and cash, while hedging currency exposure. Concurrently, Teleflex will separate into two independent publicly traded entities: RemainCo and NewCo. This strategic move aims to optimize their product portfolio, enhance margins, and improve shareholder value by facilitating two distinct companies with focused operations and capital allocation strategies. NewCo will encompass the urology, acute care, and OEM businesses, and the separation will be executed as a tax-free distribution of shares to existing shareholders, enhancing growth potential with simplified operations and management focus.

The paragraph outlines the anticipated benefits of separating into two distinct companies, RemainCo and NewCo. RemainCo is projected to achieve over 6% revenue growth and enhance Teleflex's adjusted gross margin, although its operating margin may initially remain neutral due to increased R&D investments. The separation, expected to complete by mid-2026, aims to streamline RemainCo’s portfolio and enhance its capacity in high-growth hospital-focused markets by acquiring BIOTRONIK's Vascular Intervention business. This move is expected to improve margins, boost R&D investments, and better align capital allocation with growth strategies. Leadership for NewCo will be announced later.

The paragraph discusses the strategic benefits of separating into two entities, NewCo and RemainCo, for improved focus and growth. NewCo will concentrate on urology, acute care, and OEM markets, leveraging its market positions to identify and capitalize on opportunities unique to these areas. RemainCo, with projected revenue of $2.1 billion in 2024, will focus on high-growth hospital markets following the acquisition of Vascular Intervention products from BIOTRONIK. Its product portfolio will cover vascular, interventional, and surgical units, enhancing its market presence and offering significant growth opportunities, especially with the inclusion of its Arrow branded catheters and emergency medicine products under the QuickClot brand.

The paragraph outlines the product categories and business focus of NewCo, a company with projected 2024 revenue of $1.4 billion. The Interventional segment will feature coronary catheters and structural heart support devices, enhanced by the acquisition of BIOTRONIK's Vascular Intervention business. Surgical offerings include single-use and reusable devices for various procedures. NewCo will diversify its focus on neurology, acute care, and OEM markets, with urology products like the UroLift System and Barrigel Rectal Spacer. Acute care products will include anesthesia and respiratory items, while the OEM segment will provide custom medical device components.

The article paragraph discusses the anticipated benefits of separating Teleflex into two companies, RemainCo and NewCo. Post-separation, both companies will streamline their operations, reducing from seven to three product categories each. RemainCo will scale down its manufacturing from 19 to seven facilities, focusing on complementary business within hospital-focused markets worth approximately $32 billion and growing at mid-single-digit rates. It expects a revenue growth of over 6%, improved gross margins, and double-digit earnings per share growth in the first year following the separation. Additionally, the separation aims to enhance RemainCo's R&D investments and potentially improve margins over time.

Following a separation, RemainCo and NewCo will both focus on optimizing financial strategies and growth. RemainCo intends to prioritize internal investments, growth-enhancing acquisitions, debt repayment, and shareholder returns, aiming for a net leverage below 3x by 2026. NewCo, with a robust $40 billion portfolio in established markets, expects modest revenue growth with strong hospital, ASC, and office presence, aided by OEM relationships. It aims to accelerate growth as the UroLift business recovers and expand its market through FDA-cleared opportunities. NewCo will benefit from a simplified model allowing targeted growth investments and strategic capital allocation.

The paragraph discusses NewCo's potential for growth, particularly focusing on the areas of urology and OEM. In urology, the aim is to stabilize UroLift beyond 2025, with 2024 being the final year of phased reimbursement reductions in the U.S. The focus is on specific site strategies and developing UroLift 3 to improve economics and maintain strong scientific support for its use. Palette revenue surpassed 2024 guidance, showing over 30% growth, with expectations for continued double-digit growth. In OEM, growth dynamics in 2025 are seen as temporary, following a past annual growth rate of 9.5% from 2014-2023. Factors like customer vertical integration impacts and inventory management are expected to normalize by mid-2025. Post-separation, OEM aims to expand its customer base and capabilities. The section concludes with transitioning into a Q&A session.

The paragraph discusses Teleflex's strategy of optimizing its product portfolio as part of its value creation framework. The company has undergone significant changes, evolving from a diversified industrial company to a focused medical device company through various acquisitions and divestitures. With the acquisition of BIOTRONIK Vascular Intervention, Teleflex has identified two distinct businesses with different growth and capital allocation strategies, which would benefit from being independent entities. The separation of these businesses, referred to as RemainCo and NewCo, is seen as a clean and feasible transition given their aligned operations. The decision to separate is aimed at maximizing value for shareholders, businesses, and team members. Patrick Wood responds with a follow-up question.

The paragraph discusses the strategic benefits of Teleflex's acquisition of BIOTRONIK's Vascular Interventions business. Liam Kelly explains that Teleflex is strong in the Americas, while BIOTRONIK excels in EMEA, allowing them to leverage strengths in both regions by combining their businesses. This merger provides Teleflex with new opportunities to sell products in the U.S. and Europe, where BIOTRONIK struggled with market access, and enhances their product offerings in cath labs. The two companies have complementary strengths, with BIOTRONIK's drug-eluting stent being particularly suitable for complex coronary arteries. The operator then introduces the next question from Matthew O'Brien, who wishes outgoing Tom good luck.

The paragraph discusses Liam Kelly's perspective on the acquisition of Freesolve, focusing on the potential growth opportunities and skepticism surrounding the acquisition due to the older nature of some technologies involved. Key products in the portfolio, such as the PK Papyrus covered stent and the Pantera Pro drug-coated balloon, show solid compound annual growth rates (CAGR). Kelly highlights the transition from older polymer products to newer metallic ones, offering revenue growth potential. The acquired portfolio, though not encompassing the entire Vascular Interventions business, has seen a 5.4% CAGR over the past few years, which could exceed 6% when adjusted for specific factors like late 2024 volume-based procurement changes in China.

The paragraph is part of a discussion about an acquisition by Teleflex, which is expected to significantly expand its presence in the catheter lab market in Europe and the U.S. They anticipate closing the deal in late Q3, which is projected to generate approximately EUR 91 million ($94 million) in sales in the fourth quarter and about $375 million annually. The growth expectation for the acquired business is 6% or better from 2026 onwards, with additional future opportunities through Freesolve. The Operator then introduces a question from Jayson Bedford of Raymond James, who congratulates Tom on his retirement and asks Liam Kelly why he chose to stay with RemainCo against Newco, and whether they considered divesting parts of the business instead of a spin.

The paragraph discusses a company's plan to separate into two entities to unlock shareholder value, intended initially as a tax-free spin-off. However, they're open to selling if it creates more shareholder value. The speaker plans to stay with "RemainCo" to drive its growth to over 6% and maintain a mid-60s operating margin. They emphasize continued investment in R&D. The operator opens the floor to questions, and Shagun Singh from RBC asks about the downward revision in 2025 business guidance to 1%-2% constant currency growth, expressing surprise. Singh also inquires about the confidence in achieving 6% growth for RemainCo post-separation in mid-2026 and beyond. Liam Kelly responds, addressing the second part of the question first.

In the paragraph, the company discusses its 2025 guidance, noting that their overall business growth, excluding the impact of volume-based procurement in China, is expected to be in the high single digits. However, there are challenges, particularly with the RemainCo and UroLift. The guidance predicts a growth of 1% to 2% for the next 12 months, with low single-digit growth in the Americas and APAC, and mid-single-digit growth in EMEA. UroLift is anticipated to face challenges due to being the last year of reimbursement, and there are no expected improvements in its environment. OEM is also expected to face tighter inventory management, accelerating from 2024 into 2025, compounded by vertical integration impacts. In APAC, volume-based procurement will impact the Surgical business growth, particularly in China, reducing expectations to low single digits. These combined challenges account for an approximated $100 million impact, with UroLift being the most significant, followed by OEM and volume-based procurement.

In the paragraph, Larry Biegelsen asks Liam Kelly about plans for BIOTRONIK products in the U.S., specifically Pantera Lux and Freesolve, and about the separation of the business. Liam Kelly explains that the Pantera Lux requires work on coating technology before it's broadly available in the U.S., while the Freesolve will continue undergoing clinical studies in Europe with plans for the U.S. updates by 2026. On the business separation front, Kelly mentions that for stranded and stand-up costs, one could refer to recent precedents as they anticipate their situation to be similar, though every spin is unique.

The article discusses the financial outlook and structural plans for two companies, RemainCo and NewCo, following a corporate spin-off. RemainCo is expected to grow at over 6% with a gross margin in the mid-60s, while NewCo is projected to grow at low single digits with mid-50s gross margin. The capital structure and ownership details post-spin-off will be disclosed in Form-10, with both entities aiming to be strong independent companies. The discussion includes considerations for debt allocation between the two, as the consolidated business currently holds $1.65 billion in debt. Additionally, potential top-line and cost synergies with BIOTRONIK are mentioned.

The paragraph discusses the potential synergies and growth opportunities for ParentCo and BIOTRONIK through the combination of their sales channels, particularly in the vascular access and interventional markets. Liam Kelly mentions the opportunity to sell products with peripheral indications through a more unified sales force in both the U.S. and Europe. This approach aims to make the companies more relevant within the cath lab call point and drive growth. Additionally, the paragraph references a question from Richard Newitter of Truist Securities about the interior balloon pump market's forecast and competitive dynamics, though no specific answer to that question is provided in this excerpt.

The paragraph discusses the company's plan and outlook related to tariffs and management changes. Liam Kelly addresses the future management of NewCo, stating that a search for a new CEO and CFO has begun, with some internal staff expected to transfer. John Deren explains the company's exposure to tariffs, particularly highlighting the potential impact if tariffs are enacted for Mexico, where they have substantial operations. The discussion also touches on intra-aortic balloon pumps, noting they are performing better than expected and have a favorable outlook. Craig Bijou then asks for specifics on the potential impact of Mexican tariffs and whether the OEM business is experiencing broader inventory reductions.

The paragraph discusses a company's inventory management and tariff concerns, noting that inventory adjustments are broad-based, particularly affecting complex extrusions. There's uncertainty about tariffs, especially their impact on medical devices and arrangements like Maquiladora. The company is moving inventory to mitigate potential tariff impacts. Additionally, regarding the decision to move balloon pumps to NewCo instead of RemainCo, it was due to their fit with acute care, having a separate sales force, and their margin profile, making them more suitable for NewCo.

The paragraph is a transcript of a discussion involving Michael Polark, Liam Kelly, and Mike Matson, focusing on the separation of anesthesia and vascular businesses and a BIOTRONIK deal. Liam Kelly explains that the anesthesia business, particularly general and regional anesthesia, doesn't have significant synergies with the vascular business, except for emergency medicine, which will remain with RemainCo. He indicates that the remaining anesthesia business aligns better with NewCo, considering its margin and growth profile. Mike Matson inquires about the gross margin of the BIOTRONIK deal, noting it's similar to the current corporate gross margin but lower than expected, potentially due to their significant sales in Europe and outside the U.S. Liam Kelly confirms this and mentions ongoing investment in the business pipeline.

In the paragraph, the discussion centers around the potential for improving gross and operating margins in the U.S. due to accelerated growth and new product pipelines. Mike Matson inquires whether a U.S. pivotal trial is necessary for commercializing Freesolve in the U.S. Liam Kelly confirms that a separate trial is indeed required as the current trial is for Europe. He notes that by 2026, they will update on the U.S. strategy after enrolling more patients in the European trial. The session concludes with closing remarks by Lawrence Keusch, wrapping up the Teleflex Inc. fourth quarter 2024 earnings call.

This summary was generated with AI and may contain some inaccuracies.