The paragraph is an introduction to Teleflex's First Quarter 2025 Earnings Conference Call. It begins with the operator welcoming participants and explaining that the call is being recorded for replay on the company website. Lawrence Keusch, Vice President of Investor Relations and Strategy Development, then introduces the call, mentioning the availability of press releases and slides, and reminding listeners about forward-looking statements that involve risks and uncertainties. Participating executives Liam Kelly, CEO, and John Deren, CFO, will provide remarks and take questions afterward. Liam Kelly is set to discuss first quarter results, strategic and commercial highlights, and provide updates on 2025 financial guidance.

In the first quarter, Teleflex reported revenues of $700.7 million, reflecting a 5% year-over-year decrease on a GAAP basis and a 3.8% decline on an adjusted constant currency basis, aligning with previous guidance. The revenue shortfall occurred due to decreased orders in EMEA, which have since rebounded. Adjusted earnings per share for the quarter were $2.91, a 9.3% drop from the previous year. In the Americas, revenues decreased 3.2% year-over-year to $475.7 million, influenced by declines in OEMs and UroLift challenges. EMEA revenues fell 2.8% to $151.2 million, with strong performance in Surgical and Vascular Access offset by anesthesia issues and lower late-quarter orders, which have improved in April. In Asia, revenues decreased 9.7% to $73.8 million, influenced by volume-based procurement issues in China, although sequential improvement is expected through 2025. By product category, Vascular Access revenues grew 1.9% year-over-year to $182.4 million.

In the quarter, the company's Vascular Access business saw significant growth, led by double-digit increases in PICCs and strong EZ-IO performance, with expectations of mid-single-digit growth in 2025. Interventional revenue grew by 3.2% to $137.5 million, driven by demand for intra-aortic balloon pumps in the Americas. Anesthesia revenue dropped by 8.6% to $86.6 million, despite growth in endotracheal tubes and hemostatic products, due to a decline in military orders and airway products. Surgical revenue increased by 2% to $105.8 million, despite challenges from procurement in China. However, Interventional Urology revenue fell by 10.7% to $71 million, with UroLift underperforming despite Barrigel growth. OEM revenue decreased by 26.8% to $63.9 million, affected by the last customer contract and inventory management issues.

In the article's fourth paragraph, it highlights the expected improvement in order rates from customers, indicating positive growth as the company recovers from losing customer contracts in 2025's third quarter. The first quarter's revenue increased by 4.5% to $53.5 million year-over-year. In commercial and clinical updates, the company announces that its AC3 range Intra-Aortic Balloon Pump received FDA 510(k) clearance, allowing it to enter the U.S. market in the second quarter of 2025. This innovative pump supports patient transport across various modes. Additionally, preliminary results for the Ringer PBC Catheter IDE Study were announced, showcasing a unique helical balloon design that maintains continuous coronary blood flow during procedures.

The Ringer PBC Study is a limited, multi-center study conducted at four U.S. sites to evaluate the Ringer PBC device for managing coronary perforations during percutaneous coronary interventions. With 30 participants, the study showed promising results, achieving its primary efficacy endpoint in 73% of cases and successful delivery of the device in 87%. These outcomes are intended to support its premarket application with the FDA for coronary perforations. Ringer PBC has received FDA breakthrough device designation for balloon dilation during procedures, and QuikClot Control+ has gained FDA clearance for expanded use in managing all levels of internal and external bleeding, broadening its application beyond trauma to other surgical fields.

Teleflex plans to separate into two independent, publicly traded companies to enhance shareholder value, providing each entity with a focused strategic direction and simplified operations. Significant external interest has been noted in acquiring one of the new entities, NewCo, and strategic options such as a potential sale are being explored to maximize shareholder value. Meanwhile, Teleflex will continue to operate both entities in line with their long-term strategies. Additionally, the acquisition of BIOTRONIK's Vascular Intervention business is expected to close by the end of Q3 2025, pending regulatory approvals.

The paragraph discusses the strategic acquisition of BIOTRONIK's Vascular Interventions business by Teleflex, highlighting the compatibility with Teleflex's existing interventional product line. The acquisition is expected to enhance Teleflex's global presence in the cath lab and expand its product offerings in coronary and peripheral interventions. The integration is set to provide a complete solution for treating coronary vessel perforations and tap into an estimated $80 million market. The move also emphasizes the potential of resorbable scaffold technologies and positions Teleflex to strengthen its research, development, and manufacturing capabilities in emerging markets.

John Deren provides a detailed review of the company's first-quarter financial results. The adjusted gross margin decreased by 70 basis points to 60.4% compared to the previous year, due to macroeconomic factors affecting labor, raw materials, and product mix, though offset by cost improvements. The adjusted operating margin dropped by 190 basis points to 24.7%, influenced by lower gross margin, employee expenses, and growth investments. Net interest expense decreased from $21 million to $16.6 million due to lower interest rates and debt. The adjusted tax rate increased to 14.5% from 13.2% due to European tax reforms. Adjusted earnings per share dropped by 9.3% to $2.91, affected by lower revenue, margins, unfavorable foreign exchange, and a higher tax rate, despite reduced interest expense and share count. Cash flow from operations also declined from $112.8 million to $73.3 million.

The paragraph outlines a financial update, noting a $39.5 million decrease due to operating results and changes in working capital, driven by inventory and ERP system expenses. As of the first quarter's end, cash balances stood at $317.5 million, with net leverage at 1.8x. A $300 million share repurchase program concluded in April 2025, yielding over 2.2 million shares at $135.23 each. For 2025, adjusted constant currency revenue is expected to grow by 1% to 2%, with foreign exchange negatively impacting GAAP revenue by $5 million, instead of the previously anticipated $55 million. The 2025 revenue growth guidance has been revised upwards to a range of 1.3% to 2.3%, equivalent to $3.086 billion to $3.117 billion. Tariff uncertainties remain, with potential changes in policy and retaliations anticipated.

The company anticipates its 2025 full-year results will align with previous guidance, if not for the tariffs implemented since the last guidance update. The current outlook includes existing tariffs and delayed reciprocal tariff rates but excludes any potential future tariffs. Tariffs are expected to impact the 2025 adjusted EPS by approximately $55 million, affecting costs, with significant impacts from China and Mexico. The 2025 adjusted EPS forecast is reduced to $13.20-$13.60 from $13.95-$14.35, primarily due to a $1.05 negative tariff impact, partly offset by a $0.30 benefit from a reduced share count, expense control, and foreign exchange. The company is exploring strategies to mitigate tariff exposure, though these will require time to implement.

The paragraph discusses the company's strategic focus on optimizing its supply chain by enhancing its mix of USMCA-compliant products for tariff advantages and implementing stricter spending controls. They plan to increase customer pricing as contracts renew. For 2025, they project gross margins between 58.25% to 59%, with most margin reduction attributed to tariffs and foreign exchange impacts. Operating margins are anticipated to be 24.6% to 25%. The expected net interest expense is $75 million, the tax rate remains at 13.5%, with 44.9 million shares outstanding. For the second quarter, adjusted constant currency growth is forecasted at 0.5% to 1.5%, excluding a $2 million foreign exchange benefit. Key challenges in the first quarter of 2025 included OEM business pressures, a decline in the UroLift business, and challenges from China’s volume-based procurement.

The paragraph discusses the company's financial outlook and performance amid various challenges. Despite expected $100 million revenue headwinds in 2025 due to tariffs and other factors, certain business segments, such as Barrigel and EZ-IO, continue to show strong growth. The company remains committed to shareholder value through share repurchases and plans to split into two publicly traded entities, potentially selling one. They expect headwinds to diminish in upcoming quarters and aim to return to growth. The remarks conclude with the speaker transitioning to a Q&A session, where Patrick Wood from Morgan Stanley asks about the OEM side's demand amid supply chain issues.

The paragraph involves a conversation between Patrick and Liam Kelly regarding Teleflex's strategic direction and supply chain trends. Patrick suggests that the Vascular area, particularly with BIOTRONIK, could be a growth opportunity for Teleflex, which Liam confirms will be an area of focus. Liam also discusses supply chain dynamics, noting an increase in OEM demand and the impact of destocking early in the quarter. He expresses confidence in OEM's performance and mentions that Teleflex will concentrate on integrating BIOTRONIK while also considering spinning off NewCo amid interest from potential buyers.

The paragraph discusses Teleflex's financial performance and strategic plans, highlighting their expected $1 billion revenue from the cath lab and expressing satisfaction with quarterly results that met expectations for revenue, margins, and earnings. It also addresses the impact of tariffs, estimating a $55 million cost before mitigation. Teleflex has taken steps like moving inventory and utilizing bonded warehouses to mitigate tariff effects. They are also exploring USMCA exemptions in Mexico as a longer-term strategy to offset tariff costs.

The paragraph discusses strategies to mitigate the impact of tariffs on a company's inventory. Currently, 50% of their inventory is exempt under the USMCA, and they see potential to increase this. To qualify for the exemption, 90% of components must originate from the U.S. They are also exploring improvements in their supply chain to source products without tariffs, although this may take time. Additionally, they consider increasing prices as a response to tariffs, especially as contracts are renewed. A tariff council and regular commercial meetings on pricing are in place for ongoing strategy evaluation. The described mitigation does not include the $55 million worst-case calculation. The company has also implemented spending controls as part of a $0.30 offset against the tariffs, with further strategies planned for the rest of the year.

The paragraph discusses Teleflex's pricing strategy and business contracts, particularly in the U.S. market. More than half of Teleflex's business is contracted through Group Purchasing Organizations (GPOs) and big Integrated Delivery Networks (IDNs). The company is focusing on its non-contracted business, particularly products impacted by tariffs, and plans to implement pricing changes if tariffs remain. Teleflex intends to increase pricing by 30 to 50 basis points between now and the full year of 2025, with potential acceleration based on tariff conditions. The conversation then shifts to NewCo, where there's significant interest from other parties. The company's primary focus is on shareholder value, and they are optimistic about their ability to maximize this through a competitive process of either spinning off or selling NewCo.

The paragraph discusses the company's openness to both spinning off or selling parts of its business to maximize shareholder value. The conversation between Jayson Bedford and John Deren reveals that $55 million in tariffs will impact the financial statements starting in Q3 and will be more significant in Q4. Additionally, Vikramjeet Singh Chopra, standing in for Larry Biegelsen, inquires about the preference between a sale or spin-off of NewCo, to which Liam Kelly responds that the decision will be based on creating value for shareholders. Kelly notes significant and encouraging interest in NewCo, reaffirming the asset's value and quality.

The paragraph discusses the company's strategy of exploring both a spin-off and a sale to maximize shareholder value. Although it's too early to discuss timing, they will keep the investment community informed. In response to market reactions to the BIOTRONIK deal and prior announcements, Liam Kelly defends the acquisition, highlighting its potential benefits, such as a strong presence in EMEA and complementing assets like the PK Papyrus and Ringer catheter. These assets, along with BIOTRONIK's R&D capabilities, are seen as advantageous for Teleflex. The deal also provides optional future opportunities through the Freesolve resorbable scaffold, aligning with current trends in interventional cardiology.

The paragraph discusses the attractiveness of BIOTRONIK assets being integrated into Teleflex, highlighting significant products like drug-coated balloons that have seen double-digit growth. The speaker notes that these assets fit well with Teleflex's strategic goals in the cath lab sector. In a conversation with Matthew O'Brien from Piper Sandler, Liam Kelly mentions receiving substantial interest in a new spinoff, NewCo, from both strategics and private equity. O'Brien speculates the valuation of the combined assets from NeoTract, Palette, OEM, and acute care could be around $2 billion. Kelly confirms the interest as validation of NewCo's asset quality.

In the paragraph, Liam Kelly refrains from discussing specific asset valuations during a call, stating that they will assess valuations through comparisons to their potential stock market value, considering tax implications, and focusing on maximizing shareholder value. They have a guiding principle of maximizing shareholder returns, which will direct their decision-making. Anthony Petrone then asks about the distribution of a $55 million tariff impact between RemainCo and SpinCo. Liam Kelly responds that they are operating as one company until the separation in mid-2026, indicating that it is too speculative to discuss tariff impacts beyond 2025 due to policy changes. John Deren adds that the mitigation strategies for tariffs will affect both entities and more details will be discussed closer to the separation. Anthony Petrone has a follow-up question on BIOTRONIK.

In the paragraph, Liam Kelly discusses potential synergies and growth opportunities from the integration of BIOTRONIK and Teleflex. The strategy involves leveraging BIOTRONIK's European channel to expand Teleflex's product reach, and vice versa in the Americas. The coronary space, which contributes to 70% of revenues, is highlighted as a significant area of interest. Kelly emphasizes funding BIOTRONIK's ongoing R&D to maintain product innovation and advancing clinical trials. Additionally, there is a brief mention of interest in a company spin-off, NewCo, with updates expected by mid-2026, noting substantial interest in the entire business.

The paragraph discusses the progress and strategic outlook concerning a company spin-off into two entities, NewCo and RemainCo, anticipated to be formalized with a Form 10 filing in 2026. Shagun Singh inquires about growth expectations for both entities, noting concerns about negative growth in NewCo assets. Liam Kelly responds by stating that the company's performance aligns with their expectations, despite some initial negative growth in NewCo's OEM segment. Kelly attributes this to specific factors, including the impact of a significant customer, but expects improvement later in the year. He emphasizes the company's focus on maximizing shareholder value through this separation process. The separation is planned for mid-2026, and ongoing updates will be provided.

In the paragraph, Liam Kelly discusses the anticipated improvement in China's revenue environment due to volume-based procurement despite recent challenges, such as destocking and tough comparisons in the balloon pump business. He expresses hope that medical devices will be exempted from tariffs in the ongoing trade tensions, highlighting their importance in healthcare. Kelly also mentions that BIOTRONIK's exposure to tariff impacts is minimal due to its revenue profile. Overall, he remains optimistic about growth in the Asia-Pacific region, including China, as the year progresses.

In a discussion about the interventional urology business, Craig Bijou from Bank of America asks about the performance of Palette and UroLift. Liam Kelly responds, noting that Interventional Urology met expectations, with Palette showing strong double-digit growth. UroLift experienced solid growth in the APAC region but faced challenges in U.S. offices, particularly in hospitals, due to reimbursement changes. Kelly expresses optimism for improvement post-reimbursement adjustments. He also mentions enthusiasm for the products at a recent AUA meeting. Regarding the balloon pump environment, Kelly confirms strong double-digit growth in North America despite tough comparisons in the APAC region, consistent with expectations.

In the paragraph, Liam Kelly addresses questions from Michael Polark regarding financial guidance and performance. Kelly confirms that while the company does not provide specific EPS guidance for the quarter, they do guide revenue, projecting between $769 million to $777 million, reflecting a 50 to 150 basis points growth. Michael Polark queries the unexpected drop in OEM revenue, referencing inventory management issues and customer concentration. Kelly reassures that the OEM revenue decline is in line with expectations and marks the lowest point, with improvements anticipated as the year progresses. He notes an increase in order rates toward the end of the quarter, emphasizing a $7 million impact from vertical integration expected to continue into Q2.

In the article, it is mentioned that the company anticipates some inventory management issues in Q2, which should largely be resolved thereafter. Despite external perceptions of heavier inventory in Q1, internally, this aligns with their expectations, and OEMs have met their plans. Orders placed now will impact the income statement in the latter half of the year and into 2026. The company sees a robust platform and improvement in OEM, which should be evident to investors as the year progresses. Mike Matson from Needham asked about specific products, MANTA and Standard Bariatrics, which are performing as expected and are accretive to growth. Both products are seeing expected market penetration, with Standard Bariatrics typically having a strong Q4 and ramp-up through the year. Additionally, the high-growth interosseous and hemostatic portfolios are performing well. There was also a mention of a $55 million tariff impact, suggesting the actual annualized impact could be over double that amount.

In the paragraph, John Deren advises against predicting an annualized figure due to the changing environment, despite the impact being stronger later in the year. After the question-and-answer session concludes, Lawrence Keusch thanks the participants for joining the Teleflex Incorporated First Quarter 2025 Earnings Conference Call, and the operator announces that the call has ended.

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