Enovis (ENOV) 6 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to the Enovis Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kyle Rose, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today for our third quarter 2024 results conference call. President Relations. Vice Rose, Kyle of Investor I'm

Joining and Berry, Chief call today Chief Trerotola, Chair are Matt Executive Officer. on the Financial Officer; and Ben

Our and this Investors issued of earnings in section enovis.com. available the morning website, our release was is earlier

a using the website. which call our presentation on the will of website this audio and be be can also today's found on be later will today. slide We presentation archived on Both call, the slide

forward-looking our and beliefs making and in we're only we the statements those any in about filings release in language them, The future statements as forward-looking forward-looking During today's of set statements as harbor obligation today. estimates update some except with events do by SEC. and from and statements our required that or results the results. make not are call, regarding subject speak Actual uncertainties, forth and might forward-looking These safe earnings to today, law. we the differ to assume intend any materially risks including

appendix press presentation. regarding and further be referenced today, call found the measures reconciliation financial our to accompanying non-GAAP financial in earnings For during the information the can slide measures in relating any of details today's those release

that, X. will it Matt? With let over Slide turn who begin on me to Matt,

Thanks, Kyle. Hello, everyone, and us this thanks joining morning. for

Let's start Slide X. on

from FX margins We a and X% impact overall improvements. basis are we of growth. our and reflecting with to plans expectations by our expanded the Recon, sustainable the line and change Lima little In XXXX for on on commercial the productivity our XX% bit of basis in growth made see. impact We've EBITDA step reported expected with profitable third of trajectory tremendous the a the and quarter, months we of X points, Lima progress For reflect mix XXX adjusted on delivered year-over-year delivered integration tailwind. of comparable

first in global basis commercial the the up and X% Hips Recon XX% year to quarter accomplishments XX% when that In pleased grew Recon or the the and strong close we XX% for are confident revenue to in are have from our dis-synergies. quarter, Knees. growth. U.S. our X we adjusted X% estimated exciting teams a grew and the in place comparable months In including reported U.S. about Recon, on X. and Extremities us an delivered Slide X%, pipeline Overall, we band integration-related On XXXX. growth through in with set year of the impacts and for product new

U.S. new our as in market, we international continue Our commercial to business combined plans. normalized X% with expectations cross-selling key very more line the early and market our environment, opportunities stages to rebounded organization execute benefiting new In in product quarter, shifted grew in offense, launches. the back integration our a the we from our of while

strategy and of processes proven communicated, long-term been months and to previously X driving getting focused first the sustainable the our over we've As teams on execute place commercial aligned channels in intently we've putting on growth. our

hips. portfolio of commercial as product and gaps fill shoulders the Recon move product a combined across lean perspective, introductions revenue executed and to expect knees, We of we of made, augmented our we've initial our million guidance be system integration comfortably business negative are the opportunities our with beyond broader From believe we range nicely. cross-selling launches our portfolio into $XX impact. new glenoid progressing cones And a material progress are revision period we approaching and exciting very to Our milestones. integration we of most million and into plans within key revenue-related the $XX in pipeline of

our of our XXXX anniversaried incredibly proud the team. quarter, also In Ankle we of I'm Foot third and acquisition Novastep.

driving still pipeline. growth excited many momentum, quarter commercial eclipse coming the we've in channel come. that's double-digit business quarters. unit track step integrated Over opportunities extremity about to and significant into forward capable a the revenues Overall, we're while to comprehensive our lower X with innovation product an pipeline market a on global commercial X million last both above And years our strong was for of $XXX well and years, successfully the acceleration third development have assets consistent we in

Turning X Slide to P&R. and

and disciplined comparable X% stable a reflects Our execution. growth environment market

by both gains, this growth to this sustainability across We to drive product our new launching market-leading up improved portfolio the continue of first our segments. a productivity through shifting leverage and portfolio We're the to positions. XXXX a business. towards growth consistent our continue sciences improving renewed of new Overall, and by and strengthening the pleased strong higher-value in I'm higher high-margin, X fueled and focus recovery with for to with important work sets us lineup well introductions doing look EGX for portfolios mix. innovations confident we're I'm investments finish on bracing year. positioned robust We on performance tools that months across XXXX a to

the Now I'll details. let Ben? Ben take P&L you through

everyone. begin Slide on Thanks, X. I Hello, Matt.

a to We up approximately XX positive prior comparable points currency basis up year second $XXX sales and are versus X% pleased report million, quarter basis which XX% of the impact. on includes

especially grew integration seen with acceleration XXX we've Recon of encouraged basis as business X% across we business in approximately earlier from as points Overall, U.S. our results executed recon year. headwinds efforts the from anatomies, growth positive integration the in market our growth the with in We our are channel anticipated.

stable, remained growth growing underlying X%. Our in at P&R

and the business the improving our realize to continue benefit margins. our global from mix of We

basis gross was Lima. segment favorable of driven adjusted that the year-over-year. includes XX addition margin This by mix points XX.X%, up growth quarter Third was

our Lima cost to synergies continue well. positively as in through read operating expenses

quarter XXX last margin result a the up points As EBITDA XX.X%, adjusted a third year. these versus XX% same of our grew of benefits, basis delivering quarter

posted share was of million $XX Interest for adjusted quarter million Third quarter year. increase $X versus of expense we XX% per effective an year. prior XXXX. compared tax last to earnings Overall, $X.XX, XX% rate versus was the XX% in

Turning X. Slide to

months We are the narrowing the guidance first the of X year. to through our prior reflect results

$X.X expect billion. results of from our revenue we've to guidance in impacts growth in far recent shortages contemplates our expect comparable of range, seen We we hurricanes X% fourth that approximately tightens the and X.X%, revenues which thus This IV the quarter.

seeing growth about a basis excited the XXXX includes points acceleration As approximately ongoing outlined integration business across expect integration we with reminder, behind that We momentum in XXX the comparable year. rate headwinds earlier the and the headwinds continue us. remain in to the we're of

will XXX basis adjusted margin $XXX in versus points to expected our range million. more prior of million or narrowing are We EBITDA This expansion to year. $XXX result

raising and We the from the to million, in to per will is of we the for prior consideration, lower $X.XX. expense share prior tax double-digit adjusted share strong result come to count guidance. depreciation expect $X.XX interest Taking and are which and $XX in range year. million earnings our range approximately last respectively. all earnings versus Guidance $XXX rate this of remains into This at unchanged growth end

see To stabilized summarize cross-selling. Recon marked quarter commercial from on our as began Slide X, we in the channel acceleration early to benefits some growth a and third our modest

in solid and are We pleased and plans Overall, set to XXXX of XXXX. improving the finalize business continues ramping our we QX forward to another we that are or track about excited and product the be of innovations continue the performance guidance to our early slightly XXXX. mix, beginning within looking new the forward taking at year, as for step we ahead our with

Q&A. Now start to I'll the hand it Kyle? over to Kyle

analysts Q&A you session can in an the We'll one In everyone we're we to the time. the keep time, that, one reasonable follow-up. please a questions. and fit ask to rejoin have up accommodate if the effort open With for question welcome Ben. to it to in we'll questions and Thanks, to things operator, you keep queue, and going

Wells Vic Fargo. first question Instructions] from [Operator comes The from Chopra

on quarter. Two me. Congrats questions from the

synergies. the expect nice XXXX? expect just to see dissynergies was QX we if in QX and for should of on was the first step down QX, maybe in compared dissynergy any about what So to you talk It

Thanks Vic. the Yes. question, for

now the into in be to a continues the past, cross-selling we is that what of QX that's I to of offset some I've stabilization think of being true coming what see peak play. the said continue by

another what terms still step QX, of then down and off a impact clear as to be into the year in clean but of little it go we we start to impact in XXXX. bit expect So XXXX in

Recon our growth any then in at next it. tailwinds Got talk about and we And how year to my follow-up just is, models out about for year question headwinds XXXX, thinking call you're XXXX? maybe or potential other for as look next

integration. having Yes. this again, that consistently From we've overall an from negative point about drag talked the year or so of standpoint,

put et we plans consider range step of guidance around rate together set to consistent our into said, then cetera, year. and step that's guidance market remain as just into next we Ben And got plans, but considerations on going that year, on we fact next As the year. as clear next execution, as assumptions, for clears rest some new it's this products, that to headwind the growth year, we'll the we around the it those our

Evercore The ISI. Kumar Vijay comes next from from question

here. shortages some maybe quarter be our the Is and that points it are all what a segments? should at fourth extra Have assumption or you hurricane? impact on a least think -- you you fluid assuming already a fluid this days being couple guidance bit offset modeling from is basis shortage? Matt we had Could of granular on I IV go for tailwind. Ben, QX? math, seen by for more of hundred Or of little

Yes, sure.

part we because the impacting a from of the some well the mentioned well, as comments in things were there definitely U.S., down early that So shortage. in going market stepped the the disruptions September as certainly but storms as the in some we into systems bit there, of a as both on QX, lot slowed IV of front

the and environment, and came end So we that market we're here into where optimistic November, in not we then as the reflect to the more certainly conservative tried our impact and about work healthy we're that about quarter the end as be October and seeing normal of through back go And things from quarter. through much through coming year. a we've of

in We to run markets finish here. U.S. the a expect the healthy good

in the want uncertainty said we much a we get conservative be a extra decent those a year about we'll the where amount unique know much of but consistently to of time pretty those. come how day, days, time they around -- how at from the from there's at comes bit we've And

year. we've again, have momentum tried that into to great that step servative and so build And to guy next into the is we QX with sure sets make us

-- Is guess, margin the million, plan, is despite above pretty that revenues Understood. running on from we 'XX, how of tightening $XX are And range $XX of operating that much you, million still that Ben about the impressive margins the upside for was the is here. I -- thinking here, And there in maybe execution recognized perhaps how synergies? 'XX? As higher? of you fiscal much was now, fiscal relevant? Is here the think I'm

Thanks, Yes. Vijay.

our we're against a for those. have ability of I execution really is execute and really integration consistent seeing plans, us think against which opportunities what good great identified to lot

seeing especially definitely from picture, margin in play that there. we're that So out terms the quarter in our helping some we actions took of the of

next that the benefit I'd think maybe bit in plays the year, that, as year's we're we'll along more all say the million we in get anything, I here. into synergies, year. in least earlier $XX to million see, of we're little to we year, as on think we'll that I very at of out $XX million, into updated we $XX seeing about that. a How confident we better said expected that much give But working identified and XXXX. of If go as make that you information we've this as

comes Marcus from JPMorgan. question Next Robbie from

good of a the forward coming because this a top the of markets? in some quarter and to is is end lowered but ask are quarter questions and guess, line health consensus I bottom already. your how where you've row asked the the success the ask way, integration quarter now your you so quarter. a thinking the in kind I and fourth far quarter on fourth guide of this Maybe on different and had for second the below tie versus fourth process And about there off

when of kind the in And sort you'll underlying the kind you Is of that any move into a we've of reset? course forward something there accelerate gives is down confidence year what next seen there growth? touch? So changing the

Yes. Thanks question, for Yes. the Robbie.

in very XX% put going first and out U.S. behind we've the the integration quickly us. of the gotten importantly, much channel channel we the are we've set to And -- So the it integration all the gotten for done. and sure, about outside do efforts integration on which very behind very U.S. well, track, us,

also integration that And done something so of the within of signaled from is we've in we've we larger being But that the we net the the impact and start. of of of always less talked those channel the of year. about through, that the the kind risk earlier more impact of impacts, and in worked had year part the part it range way later them most

And there sure, is corner as the so into for year, we turn opportunity. an acceleration next

of X on of that the into outside that's year. that quarters QX expect were normalization there's what into QX. first They normalized through say, to we the strong the to here. the and would be turns in continuing I recon going and year been that And took markets the place, more next what's market, Now then a in very U.S., have

that's the so our affected trajectory for And sure. of year what has part through

I this but have think been the fine, certainly great. U.S. haven't they year markets been

performance of we're And possible issue the just about we transparent as and as the the so to we plans And our that. year. try some what through that our very be as But standpoint. strong execute anything sequential profit well. deliver to progress little we as been the executing for through is we're feel bit that. from an and within our ability how the and year this step how year up good executing are about It changing against very market guidance year through has a Not of

hurricane Yes. would the elective cancellations seen in and we have that And impacts to IV of of the I add the the to Robbie, due just that, some slowness start given quarter, shortages.

expect market there. conditions latest if be So guide. upside in But we that don't there I'd recovered we is But facing, are overall, I say quarter some contemplate. to in had to does, the and near-term then we that there's it which our mean, some

of ankle, a just was shoulder maybe what important could especially the us company. Great. to follow-up, there, a by Extremities so detail more and progress you're out forward ASA. little within broken is on growth seeing given I if you the give wondering the

that of growth, to been here, Extremities for see, we've QX extremely you the and there is driving really shoulder reverse strong above-market growth the We've hitting we and growth for -- that towards and particularly year. on front, are had when to quite The The impact and some of from to strong. Shoulder our market ramp ARG that, of strong a in performance can it the bit QX start Foot little starting product, improving been Ankle number as in has integration very able We a will you into and got continue. quarters expect adjust growth be headwinds just next the ramp. to

and some opportunity other nice shoulder quickly products Shoulder And headwinds and We've beyond that great getting back shoulder part integration hold do we're to environment. from in so into rates synergy the get got see growth our starting marketplace, healthy that cross-selling. we confident Shoulder there. a market the above And We ARG with the it come ASC. the of product to some growth meaningful in ASC see very

in So participating we're that definitely trend.

from Young question comes next from Lee Jefferies. The

little a million bit, growing to follow an digits. NAV double up it's I on put echo maybe and guess $XXX-plus

been business the think I EBITDA. last has year, around double-digit

some conferences new Star. made at updates bought recently You and to some products

in it get Any competition do it of time to year sort you stands expansion that So is going thoughts lines then bit and versus range? that your mid-XXs on and business? where Ankle Foot to this the little about portfolio, the [indiscernible] a think how

the question, didn't of very end hear I Young. that

just EBITDA Yes. on expansion Ankle.... I and guess for the Foot

Yes.

Okay. Yes, great. Thank you.

the we're with look, reasons. our We're been for in couple So Foot what doing definitely able have space. well very and very teams pleased there to Ankle do a of

like minimally team got real DynaNail, the got the First we a we've number line very is, products [indiscernible] It's acquired we Novastep a done that tremendous example, there. for invasive the Bunyan. our innovation and got we've and -- flagship strong the have between with for product products like that of has

customers that game good of a things also like real channel in then number changers And of surgeons flagship screws. products and able very the serve nice and there. of So important a completely. to range our high-quality terms products are They broad to plates certain the having are be there

have So driving constant product great first, of innovation, a tremendous constant there a team line product line that we of pace innovation. a and pace

that of channel that to of that Second, significantly strong the done alignment to of assembled teamwork the for strong now in the have integration aligned in create offerings creates dedicated to of and channel. that the We've channel aligned we couple marketplace. the work us succeed first focus a and hard that products and a majority fully have, enabling our that is we is degree years

And great we've design. got we've us third, KOL -- partners there that helping the with some are got

And terms in then that And that really couple margins on climb the have had and margins of accelerate our the there we most go The really But So see room at years, innovations innovations. some also our as there go path business. about margins the opportunities. we very talked we of some of the of as of forward, past our a pleased of of just path that have still versus else to the scaling pipeline need there. started the that over things portfolio. we've make of And as strong improving. with we're we buy EBITDA ourselves. nice Foot that to acquisition opportunities nice will the nice and buy in bolt-on filling got consider business find there in but We to we of I'm gross don't other end Ankle, to succeed cases, sure anything some And been in to are opportunities upper there. finally, developing opportunities have are

Great. what of just in I growth I the all integration going? next year, by for but you be and much [indiscernible] expect you meaningful right. new All for segments. XXXX? new Which pretty being how's fueled of in terms of also in will robust we it would guess products more highlighted lineup the next And a year launch the helpful. products as [indiscernible] cross-selling the Very mean highlight channel should

Yes. Thanks.

extremely that then is impact and QX important, Shoulder, impact the of next impact So meaningful first year. the kind big have first, ARG already can in half they'll an have see for in we of

Shoulder, ARG the and it. great on is big So we've gotten feedback

And very about out excited so rolling there. we're that

I and some to certainly And to there product Second, that sustain be something [indiscernible] have continue year and nice think a on we'll great have something And are going then our strong specific like about, continue that the we next excited in some the pursuing, opportunities on is to that people us planning it's really there add start in for that our to in surgeons shoulder hands on their gotten alongside as have be segment. in piece it. to cross-selling that that's great it shoulder attractive is ramp rev of leadership are custom going the is shoulder there feedback given of cases. Arvis it product shoulder innovation

enable it the that the part still nicely opportunity. to We've broader we've Second, year this next coming be using contributing people market to in that with next revision has to of us get got is version And expanding of amount still early of a Arvis through and is of year. out been -- that. nice Knee, going

And half on go an tremendous as year, global me we in out the going platform opportunity knee of for some our we as fill the piece as hip. fill then have only to that in that's that use our NAV hip, our opportunities portfolio, where really that a which become the in as to doctors we hip that's finally, get nice of to knee nice going in And now, room well basis. about think is there hip not have will right of roll still with next we create offerings. us parts and so needed into We're hip there U.S. full running in portfolio had portfolio next cross-selling is great then we some we some a of And to rest we've the after that through year are well. important as that out puzzle key a couple And in

us got And we're lineup and excited through braces so there. year and next the some this definitely in that we've between like and of products braces year. to in some coming regulatory spine done to therapy continuing. We've next products. then expand knee Sciences And our work We've some indications things clinical chocolate additional on got and going give are Recovery of generations market nice also additional opportunity lasers about some and space the P&R nice side, an

of top to excited of us environment. help maybe about more on year kind through going very that and the what's and lineup the into So next part bit year cross-selling market a product is from year of next clearing synergies little this through accelerate

The next Baird. question Jeff from from Johnson comes

if clarification, maybe $XX million put $X start on about And could lower with end you million, that to $X had right? XX%. wanted another clarification that around $X to say in I a I basis like did would think, questions, put as kind I just question million them this X about I so picture Is dissynergies the of dollar numbers. I maybe to points quarter, And in ask just be then well. XX% you fourth quarter, bigger model the if XXX in But model year-to-date. Ben, that maybe I have you and about have of that absolute

close there to numbers side? on my the accurate dissynergy Just -- are

thinking right. it, Yes, definitely about

you guess, just question. from you I X% as about the low X% higher next all maybe weren't the to guys that's guess, IV you're I conceptually But clarification in for double but historically, expecting and these talking the from you other term did fluid, to we're new have quite And all then quantify upper longer headwinds digit XQ in storms level, P&R, markets at strong Matt, Okay. for on the hoping a hear. year single to as were products Recon, to guided not

As kind kind you've together, LRP of pulls of conceptually the and the year all I be and of puts kind about should the next within range talked before? -- kind longer-term pulls pushes put of together just that

Yes. And seen. updated the at this that and we're it's impacted we've our given guidance we've not has say considered quantifying dollars absolute point, of that here. that it I'd impact in guidance and

been is to because been So We say updated have we -- include now storms that the primarily canceled terms overall, in what guidance I'd just future cases in that's additional for tangibly future quarter. quarter. What don't the expect start it to impact or the of return the problems. of any our expect of or right don't we volume have seen we've impacted

about organic Yes. we then, that combination Jeff, think consistent I as very our growth, how described things to questions think to And single-digit gets your continue the about high growth. you us LRP the is with way that our

tailwind And from some that this so guide been about accelerate to healthy terms to time, over But year, the -- that market with all headwinds expect forward of saying we do this a we've in certainly expecting year. with what was pretty last we've some talked had which it. year of on and year something consistent

had we last the probably so can like of deliver time keep the for growth going bit to us of year. a year where shaping that to little we portfolio in And kind it's take the to

Vazquez Brandon William Blair. from from comes question next The

Maybe we've first questions up one got a of about already. trend, a couple to follow on short-term

on As the impacts, just baking I the you expectations see delta if down kind I and like look like to we pretty IV these in within it this. sounds bit see coming look space. guess, maybe you're get back correctly. rescheduled Recon Typically, it a Typically, that you QX, slightly. historically ortho and think cases push little into of sure ortho the hurricane understanding we're quickly, of we make it shortage an growth impact

or that see simply this wait am not you coming come curious there the when of some they there they're conservatism correctly you're just kind just one, in assuming this any I to as wouldn't quarter? understanding reason back Is back? So is

Yes.

first, of that businesses many were not our to important mention So our ortho just it's businesses. impacted,

because bracing time. something And to come when that lot have that piece take would storm, down a the things that so at rescheduled you They differ might you gets a back of the as maybe clinics the later aren't patients of a impact if like that's are versus is have fit longer not. the surgery while for for another canceled surgery into schedule or

we've like disruption of a pushed are quickly. so seen there's when situations like comes And this that some of or back it kind when this,some in back surgeries

Some of time come doesn't it back. maybe it a little and of takes more to back come

healthy year et year, And to year. through crazy like they're plays so people the is we're the the remaining which summer, the vacations and cetera, of to some time It's of looking end I very think see run the also a that took how when through out. end full at the and end of year the

the So year. people planning I in are end what through terms of backed think schedules were pretty to of do the

need in the the year, be room and some early have part we some next so cases able those roll surgeons they later over not may just of to the into move And year. to think will them

confident how and going we'll be finish the is beyond. but to to quarter discuss very momentum momentum very about kind early us kind So gives this next in the we on into half we're finish trying we still still feel of the go, next how and there's transparent those about good and that of as Yes, there the year back year. year the unique effects to quarter. some We're we'll some year how build the in acceleration going of year

becoming picture like things bit. bigger now, are maybe a then and integrated businesses And seems Okay. as the rebounding it little are

where new moving you of kind the XXXX? going deeper of surgeon how are of the current surgeons the trough just through terms You're into trend most go past as signing base? installed strength guys versus in we on that dissynergies And seeing should

Yes.

into I sell well opportunities. the see surgeons the some in new hip adding that nice both to opportunity great still we the and the world So installed about earlier around as opportunities of cross-selling talked base like as opportunity specific

basis. we well. base So we as come and surgeons growth going market growth And new to installed our see as how can penetration is as clear step in to from for next as a path grow as well can the both as see accelerate a on recon can how U.S. U.S. above outside our well we the year growth markets consistent we into continue

comes Genuity. from Caitlin next from question The Cronin Canaccord

terms dynamics doing end market market. you with Foot starting and segment? and above But procedural obviously the well that and Just growing in Ankle, what of demand see are you in guys do

Yes.

I think really that Foot and market single-digit fact Look, like and the question was dynamics. market growth high and Ankle end end also Ankle about a an Foot is the we there's in better work and problems it's fragmented, of still partially of plenty unsolved problems where things on market to solutions solved there's end or more indications, of unsolved terms solving. plenty

market creates what dynamic segment. innovation nice well as like that's an about and And we that a cadence as really opportunity, growth so the

enough variability to some I And [indiscernible] joints think diversified segments fund and footprint there's a or Ankle growth there is more a able innovation the through dynamics. we're the growth noticeable, like some to we've the strong business. a than for -- there's a Foot portfolio traditional us, strong opportunity. month-to-month and We we in basis, but that like where of those the it little right drive of of got seems practical in on a reality to quarter-to-quarter maybe large me

your are expect into how launching you Hip do take in recovery long you this segment? the of quarter Okay. improved And to products XXXX, that portfolio given and

some acquisitions right year have again, U.S. we end Hip, does launching, In we'll some of Hip as be key the Hip there. the in just we to clear, our Yes. again, quarter. got come that around that great into got because the the products well, very outside products out and first the from be U.S. the

And And so we'd the a of half into impact. more expect from see substantial quarter, second they're that we to having time the year, impact meaningful we and a start back get the by the those.

year be will I and get the gives the contributor the that. say, to of back coming what be all acceleration cross-selling the So some of additive Shoulder And QX. of ramp as we the QX, that's an with some going half the Knee of will we us constant then across as into come the then with acceleration Hip through would ARG acceleration

Danielle Antalffy The comes from UBS. next from question

long-term appreciate But Congrats all more feel was this portfolio priorities acquisitions about about like the a market is you're done It's question. I think guess envision a as is where a better product now good is when the biggest or be you since asked on going guys pretty biggest -- goes, But time. a XXXX the company. was a Limor. growth -- higher that It to way quarter has at a ask that. here. a we as the question of where going level, ever to my but question, and perspective? a is, I from a from you year guess feels we question once maybe but... guess one company getting underlying like accelerating look been I acquisition I at just and integration question initial have where the through of here, of capital growth you I deployment high-level the you company That different on

you of and Recon a We're higher was than from period And but at with we've gross business, growth P&R higher with digits here, size XX%, business strong Medtech billion into single now in that business business we've We're Nova, in of X Thank a that to more side. that for rates. a margins strong generator. dedicated than P&R very very in a that strong strong on Recon that step and point the Recon above revenue. in Recon go a accelerating in performance. the is of that through more over the question. consistently comfortably integration about growth the terms small a growth, And a more in it's been of of $X margins billion plenty almost yes, improving an time. well in really whole built grows margin back XX% we little to market backside over we've cash that arc And now time $X terms XXXX-XXXX years the then company the back in changed later, time not business the plus business doubled exciting had the was that And very period company

lot a So of over tremendous time. progress

also a has the our the margins expands for because through that's well bigger a of expansion. We're business execution haven't focused that, P&R, Recon side generator. our looking than that low improve core something get standpoint, could growing driver innovation much really mid-single-digit it something turn be that business gross growth gross future, -- we got single-digit that faster work to on and a a into We've As of and from more we're and we having very and stronger on it continue also if but grows fundamentals on cash portfolio that a and higher we changed. a look margin that continuing P&R and now through to systematically business our stronger business into to market segment strong above that having that over shape focused be ways

space can continue the bolt-ons access to into at business. other segments within expect key and talent a are segments look markets fundamentals add certainly access growth, of have are ortho space attractive somewhere that that but do can thought that we other And bit or ortho could in be bring We that would and we'll things the our be over of little we're accelerate time, in in adjacent new outside might technologies the for logical to segments capability but we Ortho confident that of Medtech, margin lot given terms growth the other we that us, step still set value. that and and a

$X value billion to growth, time. organic climbing from one. growth, cash billion of curve expansion for to going to to an exciting up lot $X a and inorganic the $X compounding So billion flow see from path the drive billion margin value $X shareholders the another one, get being we over We path exciting that's as been our

& question from Needham from Mike comes The Company. next Matson

the one to on wanted international ask just side. I

integration there, are And Lima in dissynergies the U.S. next So is there that you a do risk little year? sort of see you of where carrying any bit? lagging into the

lagging The not difference it's U.S. is there. No, the

channels indirect before direct one latter timing what's step market got to business, really And direct we've a a middle the of all fully year, started hybrid difference the move had most indirect of those we the us them, terms for and were quickly or of a in as there other. out by markets through them them market the by planning there either hybrid solution really solution, market best and close. the that the part some is are the in and what's the right from to through of behind direct So there fully even And solution. last year, we've well. been The did we where

said, right just about that XX% are year. to amount to be more we've little a integration. trying U.S., still any to next of that the of worked markets there I see are about meaningful into transparent carrying time We're to through a few do the markets to get the don't hybrid there right As already be risk that few the through integration, we're will revenue outside through. but time We fact breakage a more bit been the that the take through is channel thing find

the side, pretty Got have competitors knees. your a Okay. from I seen Knee know on mix just And cementless bigger benefit it. then big several of

market? So segment you any have do that the plans of to enter

Yes.

had in have had cement good offerings. with -- also cementless We offerings knee very our and have healthy growth I've

Kumar. [Operator have Vijay Instructions] a follow-up from We question

free think cash there flow ex to due here. still if performance run out that about free be resin? the Ben, timing business? to year-to-date performance you when maybe cash on the rate flow at the way right The deal look Should is what trends, And underlying XX% cash just cash one free noise? bill what's is you free cash free

Vijay. said, Yes. better, QX heavy of of that behind progress, the And I'd us. opportunities sure time. doing Lima throughout to going bring we're we I've company. on us making step We the Yes. integrate Like on for towards flow forward cash as investments set as year a where some into much then this these cash ourselves a I flow that the well this a free us say, we'll to even I'd be the items see Again, to steady-state another lean get heavily think forward as getting up to to get right seeing that set we're plus and XX% conversion lot still focused Thanks, more year, still we and very of to year transformative course growth this up well. investments we better year start to pathway growth to integration-related year into you've we're as as progress, acquisition in XX% seen spending we we'll think take the work that XX% step after next a to over you're next conversion. investing see But XX% about ourselves say,

Understood.

cash 'XX? Is statement? positive Is that -- free that be fair in so fiscal a will Sorry.

that's Yes, fair statement. a

for question-and-answer closing to remarks. I conference our concludes Kyle like This to over back session. the turn would

I out. the and thanking members want our to end excellence commitment to their end day to call day I for is the want by call this in team Matt here. --

and momentum We to internal organization look and you our have quarter for delivering year. of for all Thank in -- today quarter we participating, for fourth stakeholders. value external forward you results excitement and committed a of and lot remain listening our sharing across new and to with the the third

presentation. The conference you for concluded. Thank has today's attending now

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