Enovis Corporation

Good day and welcome to InnoBus Second Quarter 2025 Earnings Conference Corner. All participants will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star keys followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your questions, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Kyle Rose, VP Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us today for our second quarter 2025 results conference call. I'm Kyle Rose, InnoBus' Vice President of Investor Relations. Joining me on the call this morning are Damian McDonald, Chief Executive Officer, and Ben Barry, Chief Financial Officer. Our earnings release was issued earlier this morning and is available in the Investor section of our website, InnoBus.com. We will be using a slide presentation in today's call, which can also be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today. During this call, we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in the Safe Harbor language in today's earnings release and in our filings with the SEC. Actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law. For further details regarding any non-GAAP financial measures referenced during the call today, the accompanying reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today's slide presentation. With that, let me turn it over to Damian.

Thank you, Kyle. Good morning, everyone, and thank you for joining us today for our second quarter earnings call and my first as CEO of InnoBus. Before we walk you through the quarter, I want to take a moment to speak directly to our investors and shareholders. I recognize the trust you place in this company and in me as its new leader. Your confidence and support are what make our growth possible. I've stepped into this role with a deep sense of responsibility to our patients, to our health care partners, to our employees, and to you. I look forward to engaging with you and earning your confidence with our results. I've been at InnoBus for just over 90 days, and I would like to share with you my observations on the company and the opportunities ahead of us, as well as begin to outline our near-term priorities. I started in my role shortly after the third anniversary of the spin-off that created InnoBus, a medical technology company with an unmatched portfolio spanning surgical solutions, bracing, and rehabilitation, all technologies that align with our orthopedic continuum of care needed by patients and their providers. In those three years, we've brought more than 10 companies into our portfolio. Our transformation has been notable, scaling from $1.4 to $2.2 billion in revenues, from 56% to 60% in gross margins, and from 14% to close to 18% in adjusted EBITDA margins. This growth has been deliberate and driven by organic expansion, portfolio shaping, and targeted acquisitions that align with our strategy to globalize our business towards faster-growing, higher-margined end markets. It's clear that we've got a strong foundation and an unmatched diverse portfolio of solutions, but to realize our full potential, we must maximize the power of what we've built. There are opportunities to improve the durability and consistency of our organic growth, margin expansion, and cash flow generation. Each of these improvement opportunities will be supported by disciplined capital allocation. In my first three months, I've been out in the field and actively listening and engaging with our global stakeholders, who are key to our success. This included visiting customers, hospitals, and medical centers, and meeting key physician partners. It was encouraging to hear how highly they regard our portfolio of products and their views on the opportunity we have to gain share. I've also been busy internally, connecting with our senior leaders and spending meaningful time with our teams around the world. It's been incredibly energizing to witness firsthand our passion for restoring motion and improving patients' lives. Having toured all our major manufacturing sites and corporate offices, I'm now concluding comprehensive reviews of each of our business segments, functional teams, and sales regions to inform a multi-year roadmap centered on profitable, capital-efficient growth in order to improve patient outcomes, become a talent magnet, and deliver outsized shareholder returns. In the near term, I intend to focus the organization on three key priorities, commercial execution and innovation, operational excellence, and financial discipline. In terms of commercial execution, Anovis operates in attractive, sizable markets and competes strongest and most financially capable technologies in med tech. We have, and we will need to, always bring our A-game to every customer-facing activity. I know that there have been instances where complex integrations and rapid product launches have stretched our teams. The opportunity lies in further embedding and expanding disciplined commercial practices across the enterprise. With respect to innovation, we must use size to our advantage and reinforce our ability to be nimble by quickly identifying and addressing key market trends and making focused investments in those areas with the highest differentiation and market potential. An immediate priority for our team will be accelerating our product pipeline with a particular focus on enabling technologies that improve clinical outcomes and surgical efficiency. Regarding operational excellence, a large part of my experience in this area centers on focused business system philosophies to deliver exceptional long-term financial outcomes. High teams, EBITDA margins are not sufficient to achieve our company's goals and ambitions. To that end, we are developing detailed plans to optimize resources, augment gross and operating margin, improve cash flow, and address leverage directly, while continuing investments in customer-facing and R&D activities that promise differentiation and profitability. Additionally, while EGX is central to our operating philosophy, its implementation remains in varying stages of maturity, largely following the successful acquisitions over the last five years. I believe the accelerated application of this business system will improve capital allocation and operating efficiencies, and I am confident we will see tangible improvements in cash generation, leverage, and productivity in the near term. And third, with multiple operating companies under our umbrella, it is important to further embed organization-wide financial discipline to expand margins, improve working capital and capex efficiency, and significantly reduce integration-related costs. As our foundation gets stronger, we will create the flexibility for broader capital allocation decisions in the future. Finally, under my leadership, Anovis will build on our strong culture of thoughtful speed, transparent accountability, and collaborative empowerment. Our employees remain central to achieving our mission, and we are actively investing in their development, fostering an open, high-performance environment, and encouraging cross-team collaboration to get better every day. Now, let's turn to our second quarter results. In the second quarter, we delivered reported growth of 7% and 5% on an organic, constant currency basis. We delivered strong earnings growth and positive cash in the quarter, while managing tariff headwinds. Our teams have made good progress on new product launches, and we have a clear line of sight into a multi-year cadence of meaningful NPI. In Recon, we delivered organic growth of 8%, including US growth of 6% and international growth of 10%. Growth in US extremities was 10% driven by strong double-digit growth of shoulders, led by the launch of our augmented reverse glenoid system. US hip and knee growth was flat, reflecting the impact of fewer selling days and headwinds in capital sales as customers deferred orders in anticipation of our next-generation hardware launch. Underlying implant growth in hip and knee was mid-single digit, and we expect acceleration in the second half of the year as new products ramp. Early commercial feedback on the Nebula system and the OrthoDrives surgical impactor has been encouraging, with a positive reception from surgeons and sales teams. Our launch activities to date have been controlled as we scale inventory and ramp surgeon training. Outside the US, we benefited from our recent geographical expansion and continue to take share in a resilient market. Our Optimus STEM and RM Cup continue to drive competitive share gains in international hip. Similarly, our SMR and Prima shoulder portfolios continue to be a highlight as we integrate and capitalize on cross-selling opportunities. A consistent theme in my conversations with our commercial teams and surgeons is the growing conviction that enabling technologies are key to having a comprehensive portfolio. Our entry and key platform in this space is Arvis, an augmented reality platform that delivers real-time intraoperative intelligence, guidance and navigation. Arvis stands out in the market because it is simple, portable and scalable, enhancing surgical precision without adding complexity to the workflow. It fits seamlessly into both inpatient and outpatient settings regardless of the reimbursement model, delivering real value where it matters most. Our next generation platform builds on this foundation with a lighter, more complex headset, improved visualization, faster registration and enhanced tracking. These upgrades also enable future expansion into real-time soft tissue balancing for knee procedures and differentiated shoulder applications. All important steps towards building a broader, more versatile multi-anatomy ecosystem. The addition of these features has extended our commercial timeline. We're now about six months behind where we expected to be, but the excitement we're seeing with surgeons gives us confidence that the enhancement will be a meaningful addition to our global portfolio. In P&R, 3% organic growth reflects a stable market environment and disciplined execution. Overall, this business is performing in line with our strategic plan and will benefit from the Manifuse Lipus technology launch and several key new bracing products in the coming quarters. Adjusted EBITDA margins in P&R improved 130 basis points year over year as we continue to use EGX tools to drive consistent productivity improvements and proactively shaped portfolio for profitable capital efficient growth. I've been in the medical industry for more than 30 years and I'm passionate about its power to improve people's lives and longevity. I'm grateful I've been given this opportunity to bring my experience to Anovis and lead the company into its next chapter of growth. Since joining, my initial optimism about the potential has only grown stronger and I am confident in the near-term strategic objectives and commitments we've made to investors, including our updated guidance that Ben will outline shortly. As I mentioned, my immediate priority is reinforcing organic growth and margin expansion while also unlocking capital efficiencies across the business. I look forward to sharing a detailed multi-year roadmap in the future. And now I'll turn it over to Ben to take you through the P&L details. Ben?