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01/10 19:45
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents strong financial performance with 22.8% revenue growth and optimistic guidance for organic growth and EPS. Despite a gross margin decline due to inventory charges, the company's strategic investments in product development and market expansion suggest future growth. The Q&A highlights potential risks like physician fee reductions but overall maintains a positive outlook, supported by strong sales and strategic initiatives. The lack of market cap data prevents assessing small-cap volatility, but the overall sentiment leans positive due to strong earnings and guidance.
Total company operational sales Grew 22% year-over-year in Q2 2025, with organic sales growing 17%. This growth exceeded the guidance range of 13% to 15% and was driven by strong performance in the Cardiovascular segment.
Adjusted EPS $0.75 in Q2 2025, representing a 23% year-over-year increase. This exceeded the guidance range of $0.71 to $0.73, inclusive of charges related to the worldwide discontinuation of the ACURATE valve.
Adjusted operating margin 27.6% in Q2 2025, a 50 basis point increase compared to Q2 2024. This was driven by strong sales performance and cost controls, offsetting charges related to the ACURATE valve discontinuation.
U.S. operational sales Grew 31% year-over-year in Q2 2025, driven by the Cardiovascular portfolio.
Europe, Middle East, Africa (EMEA) operational sales Grew 2% year-over-year in Q2 2025, or 7% excluding the discontinuation of the ACURATE valve. The ACURATE valve discontinuation had a significant impact as the majority of its $200 million revenue was generated in EMEA.
Asia Pacific operational sales Grew 15% year-over-year in Q2 2025, with strong double-digit growth in Japan, China, and Australia. Growth was led by products like FARAPULSE and IVUS.
Urology sales Grew 28% operationally and 6% organically year-over-year in Q2 2025. Growth was driven by the stone management and prosthetic urology franchises, including double-digit growth in Rezum.
Endoscopy sales Grew 8% globally year-over-year in Q2 2025, with double-digit growth in the U.S. Growth was driven by anchor products like EXALT-D, MANTIS, AXIOS, and OverStitch.
Neuromodulation sales Grew 7% year-over-year in Q2 2025, with mid-teens growth in the brain franchise and mid-single-digit growth in the pain franchise.
Cardiology sales Grew 28% year-over-year in Q2 2025. Interventional Cardiology therapy sales grew 9%, and excluding ACURATE, grew very strong double digits. Coronary therapy grew in the high teens.
Electrophysiology sales Grew 94% year-over-year in Q2 2025, driven by the FARAPULSE launch in the U.S. and uptake of concomitant procedures.
Peripheral Intervention sales Grew 17% operationally and 7% organically year-over-year in Q2 2025. Growth was led by the Interventional Oncology and embolization franchise, which grew strong double digits.
Consolidated revenue $5.061 billion in Q2 2025, representing 22.8% reported growth year-over-year. Organic revenue growth was 17.4%, exceeding the guidance range of 13% to 15%.
Adjusted gross margin 69.4% in Q2 2025, a 100 basis point decline year-over-year due to inventory charges related to the ACURATE valve discontinuation.
Free cash flow $1.129 billion in Q2 2025, with $1.286 billion from operating activities and $157 million in net capital expenditures.
FARAPULSE: Achieved double-digit growth in EMEA and high teens growth in Japan, becoming the leading position in PFA with over 15,000 patients treated since launch in Japan. Expanded labeling in the U.S. for de novo AFib ablations and initiated ReMATCH AF trial for redo persistent AF patients.
WATCHMAN: Grew 28% in Q2, reflecting strong safety profile and expanded labeling as a first-line therapy in post-ablation patients in the U.S. Initiated OPTION-A trial for concomitant use with FARAPULSE in Asia.
EXALT-D, MANTIS, AXIOS, OverStitch: Strong growth in endoscopy driven by these anchor products, particularly in ESG and closure procedures.
Cartesia X/HX leads and Illumina 3D: Mid-teens growth in neuromodulation brain franchise driven by these products.
Intracept: Surpassed 50,000 patients treated, showing strong double-digit growth in the pain franchise.
AGENT DCB: High teens growth in coronary therapy driven by this product, supported by new account openings and long-term reimbursement confidence.
TIVUS system: Acquisition of SoniVie and continued enrollment in the THRIVE IDE trial for hypertensive patients.
Regional Growth: U.S. grew 31%, EMEA grew 7% excluding ACURATE valve discontinuation, and Asia Pacific grew 15% operationally, led by Japan, China, and Australia.
China Market: Returned to mid-teens growth in Q2, driven by diversified growth across businesses, particularly FARAPULSE and IVUS.
Japan Market: High teens growth driven by FARAPULSE and new account openings.
Operational Sales Growth: Total company operational sales grew 22%, and organic sales grew 17%, exceeding guidance.
Adjusted EPS: Grew 23% to $0.75, surpassing guidance range.
Adjusted Operating Margin: Achieved 27.6%, expanding 50 basis points versus Q2 2024.
Free Cash Flow: Generated $1.129 billion in Q2, with full-year expectation of $3.5 billion.
ACURATE Valve Discontinuation: Worldwide discontinuation impacted EMEA growth but allowed reallocation of resources.
Acquisitions: Closed acquisitions of SoniVie and Intera Medical to strengthen interventional cardiology and oncology portfolios.
Clinical Trials: Initiated multiple trials, including ReMATCH AF for FARAPULSE and THRIVE IDE for TIVUS system.
Discontinuation of ACURATE valve: The worldwide discontinuation of the ACURATE valve has led to charges impacting adjusted EPS and is expected to result in an approximate 800 basis point impact to Interventional Cardiology Therapy growth in the second half of 2025.
Tariffs: Updated assumptions for tariffs are expected to create a full-year headwind of approximately $100 million, which could impact financial performance.
Integration of Axonics business: Short-term commercial disruption and destocking during the integration of the Axonics business have posed challenges to operational performance.
China VBP participation: Participation in the China Volume-Based Procurement (VBP) program has resulted in low single-digit growth in arterial drug-eluting products, which may limit profitability in the region.
Regulatory and approval timelines: Delays in regulatory approvals, such as the anticipated FDA approval of the EMPOWER leadless pacemaker by year-end, could impact product launches and revenue growth.
Foreign exchange fluctuations: Foreign exchange fluctuations have created a 120 basis point tailwind in Q2 but remain a variable that could adversely impact financial performance in the future.
Legal reserves: The company has a legal reserve of $300 million, which could indicate ongoing or potential legal challenges that may impact financials.
Third Quarter 2025 Organic Growth: Guidance for organic growth is set at 12% to 14%.
Full Year 2025 Organic Growth: Guidance raised to 14% to 15%, reflecting strong momentum across global businesses.
Third Quarter 2025 Adjusted EPS: Guidance set at $0.70 to $0.72.
Full Year 2025 Adjusted EPS: Guidance raised to $2.95 to $2.99, representing growth of 18% to 19%.
Full Year 2025 Free Cash Flow: Expected to be approximately $3.5 billion.
Full Year 2025 Adjusted Operating Margin: Expected to expand by 75 to 100 basis points.
Full Year 2025 Reported Revenue Growth: Expected to be in the range of 18% to 19%.
Third Quarter 2025 Reported Revenue Growth: Expected to be in the range of 17% to 19%.
Full Year 2025 Operational Growth: Expected to be in the range of 17.5% to 18.5%.
Third Quarter 2025 Operational Growth: Expected to be in the range of 16.5% to 18.5%.
2026 Tax Rate Guidance: The anticipated 200 to 300 basis point headwind to the tax rate has largely been eliminated due to recent legislative changes.
Adjusted Below-the-Line Expense for 2025: Expected to be approximately $440 million.
Share Repurchase: Our top capital allocation priority remains strategic tuck-in M&A and high-growth adjacencies, followed by share repurchases.
The earnings call reflects strong financial performance and optimistic guidance, with raised full-year guidance for organic growth and EPS. The Q&A section highlights promising growth drivers, including new product launches and strategic acquisitions. Despite some concerns about backorders and management's vague responses, the overall sentiment is positive, driven by robust revenue and margin growth, as well as strategic market positioning.
The earnings call presents strong financial performance with 22.8% revenue growth and optimistic guidance for organic growth and EPS. Despite a gross margin decline due to inventory charges, the company's strategic investments in product development and market expansion suggest future growth. The Q&A highlights potential risks like physician fee reductions but overall maintains a positive outlook, supported by strong sales and strategic initiatives. The lack of market cap data prevents assessing small-cap volatility, but the overall sentiment leans positive due to strong earnings and guidance.
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