Teleflex Incorporated

being recorded and will be available on the company's website for replay shortly. And now I will turn the call over to Mr. Lawrence Kirsch, Vice President of Investor Relations and Strategy Development. Please go ahead.

Good morning, everyone, and welcome to the Teleflex Incorporated third quarter 2023 earnings conference call. The press release and slides to accompany this call are available on our website at teleflex.com. Please note that webcast viewers have the ability to advance the presentation slides on their own. Simply follow along with the presentation as we proceed through the call. As a reminder, a replay will be available on our website. Those wishing to access the replay can refer to our press release from this morning for details. Participating on today's call are Liam Kelly, Chairman, President, and Chief Executive Officer, and Thomas Powell, Executive Vice President, and Chief Financial Officer. Liam and Tom will provide prepared remarks, and then we will open the call to Q&A. Before we begin, I'd like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in the slides posted to the investor relations section of the Teleplex website. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties, and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today, as well as our filings with the SEC, including our Form 10-K, which can be accessed on our website. Now, I'll turn the call over to Liam for his remarks.

Thank you, Larry, and good morning, everyone. It is a pleasure to speak with you today. On this morning's call, we will discuss the third quarter results, our acquisition of Palette Life Sciences, and our financial guidance for 2023. Turning to the third quarter. Teleslex revenues were $746.4 million. a year-over-year increase of 8.7%, and an increase of 7.4% on a constant currency basis. Third quarter adjusted earnings per share was $3.64, an 11.3% increase year-over-year. During the third quarter, we experienced stable to improving macro and healthcare utilization trends. In the acute care setting, which is our primary market, utilization during the third quarter returned towards normal seasonality. From a macro perspective, we witnessed a stable to improving environment for material inflation and supply chain in the third quarter on a sequential basis. These dynamics are generally tracking to our expectations for the year. Let's turn to a deeper dive into our third quarter revenue results. I will begin with the review of our geographic segment revenues for the third quarter. All growth rates that I refer to are on a constant currency basis unless otherwise noted. America's revenues are $428.2 million, which represents 5.5% growth year over year. In particular, we saw strong performance in our surgical and interventional businesses. EMEA revenues of $142.7 million increased 4% year over year. During the quarter, interventional led the growth, while we saw balanced performances across our other businesses. Now turning to Asia, revenues were $93.2 million, increasing 17.1% year over year. During the third quarter, we saw stable demand across the majority of the region. Revenues in China increased in excess of 20% year over year and reflected solid underlying demand. Given our specific portfolio products, we have not seen any impact on our business in China as a result of government-initiated anti-corruption measures. Let's now move to a discussion of our third quarter revenues by global product category. Commentary on global product category growth for the third quarter will also be on a constant currency basis, starting with vascular access. Revenue increased 0.3% to $169.9 million. As expected, the quarter was negatively impacted by the previously announced endurance catheter recall. Initial launch activities for our next-generation Arrow VPS Rhythm DLX navigation device and the new Arrow PIC preloaded with the NaviCurve stylus continue to generate a positive customer response and system placement. And we drove double-digit growth in our underlying PIC business. Moving to interventional access. Revenue was $134.1 million. of 22.4% year over year. In the quarter, we continue to drive our complex PCI and emerging structural heart portfolios. Balloon pumps, access enclosure, OnControl, and Manta were meaningful contributors to growth in the quarter. Turning to anesthesia, revenue declined 1.3% year over year to $97.6 million. As expected, the previously announced ET tube recall negatively impacted year-over-year growth. In our surgical business, revenue was $112.8 million, up 20.6% year-over-year. Among our larger franchises, ligation, staplers, and instruments were notable drivers of growth. For 2023, we now expect standard bariatrics Titan stapler revenues in the teams. For interventional urology, revenue was $73.6 million, representing a decrease of 6.8% year over year. In the U.S., the office remains the biggest challenge for Urolift. We are continuing our efforts to stabilize this site of service. In the international markets, we remain focused on driving Urolift revenue in Japan, while in China, our initial launch activities have tracks to plan. OEM had another solid quarter with revenues increasing 14% year-over-year to $82.3 million. The strength in the quarter was broad-based across our portfolio, including microcatheters. Third quarter other revenue increased 5.3% to $76.1 million year-over-year. As it relates to the other revenues, we have been informed by Medline that they are now in a position to exit the MSA earlier in 2023 than previously anticipated. We now expect the MSA to cease earlier in December rather than December 31st. Tom will give an update on the financial impact later in the call. That completes my comments on the third quarter revenue performance. Turning to some other business updates. On October 10th, we announced the close of the acquisition of privately held Palette Life Sciences for an upfront cash payment of $600 million of clothing, and up to an additional $50 million upon the achievement of certain commercial milestones. Celeste's product portfolio, particularly Barragel, will complement the UroLift system, covering the top two diseases within urology care, BPH and prostate cancer. Barragel is a differentiated rectal spacer. The product is easily sculpted when placed between the prostate and rectum and allows the physician to achieve predictable protection of healthy rectal tissue prior to radiation therapy. There is a large and growing global market for rectal spacers. The American Cancer Society estimates that there will be 288,000 new cases of prostate cancer in the U.S. with the incidence growing 3% a year. In addition, the increasing use of hyperfractionation radiation therapy is driving demand for rectal spacers to protect healthy tissue. From a strategic perspective, the addition of Palette's portfolio complements our strong presence in the treatment of benign prostate enlargement and helps to expand the clinical landscape of our interventional urology business. Of note, urologists perform the majority of rectal spacer placements, which will leverage our existing call point. We have a broad and established urology sales organization, which will be augmented by Palette's clinical expertise in the use of rectal spacing for radiation therapy in prostate cancer treatment. The acquisition will also enable Teleflex to engage with other specialists in areas including radiation oncology, female urology, and pediatric urology. We will implement strong peer-to-peer education, a patient awareness focus, and leverage best practices. We also expect interest in rectal spacers to provide opportunities to cross-sell Eurolift, although such synergies have not been included in our acquisition model. Finally, Barragel has established brand success, which allows Teleflex to effectively invest in and grow within a significant new market. From a financial perspective, we expect the acquisition to be immediately accretive to revenue growth and adjusted gross margin and enhance our adjusted operating margin in the near term. Moving to the topic of GLP-1 drugs, which has been an investor focus over the past couple of quarters. We continue to evaluate clinical data and monitor the usage of GLP-1s to assess potential exposure for Teleflex. We have reviewed the markets that we serve And at this time, we do not expect GLP-1s to have a significant direct impact on Teleflex's diversified product portfolio. Although our largest exposure is standard bariatrics with the Titan stapler, revenues for this product are expected to account for less than 1% of Teleflex's overall revenue in 2023. Over the past two quarters, we have seen an impact on sleeve gastrectomy volumes from the interest in GLP-1s. It is important to note that while the select trial showed a 20% reduction in major adverse cardiac events over five years, a recent study from the Cleveland Clinic, which was presented at the American Society for Metabolic and Bariatric Surgery 2023 Annual Scientific Meeting, showed that bariatric surgery has been associated with a 42% lower risk of major adverse cardiac events. While we continue to expect some softness to bariatric surgery volumes, we believe we will offset this due to our focus on capturing market share. We remain active in gaining back approvals and training surgeons during the quarter. We've also done a deep dive into our interventional business to assess the possible impact of GLP-1s in light of the results from the SELECT study, which showed an absolute reduction in the rate of major adverse cardiac events of 1.6% from approximately 8% to 6.4% over five years. When considering the types of events defined in MACE for the study and the follow-up period, the reduction in these events on an annual basis is measured in the tens of basis points. So actually, a relatively small impact. In addition, when considering that GLP-1 patients could live longer, it may only serve to delay cardiac events. Also, demographics remain a powerful driver with global populations aging. Accordingly, we do not expect GLP-1s to have a significant impact on our interventional business. More broadly, we sell other surgical products to bariatric surgeons, including metal ligation clips and closure devices. But the revenue associated with these products in this surgical specialty is immaterial to Teleflex. Indeed, the vast majority of our surgical products are utilized in general, cardiac, urology, and gynecological surgeries, and are not expected to be significantly impacted by GLP-1 usage. Teleflex also sells hemodialysis catheters through our vascular and interventional business units. In total, hemodialysis catheter sales in North America account for less than 1% of Teleflex revenues, with the majority utilized for the treatment of acute kidney injury, or AKI, which is not expected to be impacted by GLP-1 use. It is estimated that AKI develops in up to 67% of patients admitted to the intensive care unit with the vast majority not associated with chronic kidney disease. Common causes of AKI in hospitalized patients include severe infection, low blood pressure, and blockages of the renal tract, and it is often reversible. Between the businesses mentioned, as well as assumptions for other discrete product categories, total sales for products that have potential direct exposure to increased use of GLP-1 drugs is approximately 1% to 2% of Teleflex revenues. That said, the potential impact should be less than that, as the use of GLP-1 drugs may reduce some usage, but would be unlikely to completely eliminate the need for our products exposed. Our highly diversified product portfolio is primarily focused on critical care procedures, and as a result, we estimate that over 98% of Teleflex revenues should not be directly impacted as a result of increased usage of GLP-1 drugs. We will continue to evaluate clinical data and monitor the usage of GLP-1s to assess potential exposure to Teleflex moving forward. Moving to an update on our interventional access business. We are pleased to share that we are in the final stages of completion for the commercial launch of Watson Temporary Pacing Guidewire. Watson is a unique bipolar guidewire used specifically for TAVR and BAV procedures and engineered to help reduce the risk of ventricular perforation while providing confidence in capture during rapid pacing. As a dual delivery guide wire and pacing wire, Watson will complement our expanding structural heart portfolio, which already includes the Manta large foreclosure device and the Langston dual lumen for contrast delivery and pressure measurement. We are building momentum with a focus on complex PCI and structural heart. Of note, we continue to drive our innovation engine and will be launching a number of new products over the coming years. That completes my prepared remarks. Now I would like to turn the call over to Tom for a more detailed review of our third quarter financial results.