Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was approximately $383 million, reflecting a reported growth of 3.7% but an organic decline of 3.5% primarily due to ship holds [7][23][24] - Adjusted EPS for the quarter was $0.41, down 25% compared to 2024 [8][24] - Gross margins were 52.2%, down 220 basis points from 2024, impacted by manufacturing variances and increased network optimization spend [24] - Adjusted EBITDA margins were 16.6%, down 290 basis points compared to 2024 [24] Business Line Data and Key Metrics Changes - Codman Specialty Surgical (CSS) segment reported revenues of $281 million, with a reported growth of 9.4% but an organic decline of 1.1% [25] - Tissue Technologies revenues were $102 million, down approximately 9% on both a reported and organic basis [28] - The ENT business saw approximately $29 million in revenue from the Aclaren acquisition, while organic growth was flat due to supply constraints [26] Market Data and Key Metrics Changes - Global neurosurgery revenues declined 4.7% organically, largely due to ship holds affecting several product lines [25] - International performance within CSS declined by high single digits, primarily due to the timing and duration of ship holds [27] Company Strategy and Development Direction - The company is focused on a turnaround strategy that includes portfolio prioritization and disciplined program management to enhance operational execution [10][11] - A compliance master plan is in place to address quality system regulations and FDA observations, with significant progress reported in site assessments [12][14] - Investments are being made in operational excellence, including the Braintree facility to restart production of key products [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the specialized product portfolio despite current challenges [9] - The anticipated revenue headwinds from ship holds are within the assumptions made when setting guidance ranges [20] - The company expects second quarter revenue to be in the range of $390 million to $400 million, reflecting a reported decline of approximately 6.8% to 4.4% [19][35] Other Important Information - The company identified additional ship holds for certain products, now expecting total ship holds for the year to be between $55 million and $70 million [13][36] - The impact of recently announced global tariffs has been incorporated into the updated 2025 guidance, estimated at approximately $22 million [21][33] Q&A Session Summary Question: Clarification on Q2 guidance and shipment delays - Management acknowledged that the Q2 guidance reflects newly identified ship holds, which impacted expectations, but they had anticipated potential disruptions as part of their compliance plan [42][44] Question: Mitigation efforts related to tariffs - Management is pursuing several mitigation strategies, including tariff exemptions and pricing adjustments, but these impacts have not been built into the current guidance [48][50] Question: Demand visibility for private label products - Management expects a step-up in private label sales in the second half of the year, although the forecast has been adjusted to reflect a low single-digit decline for the full year [54] Question: Impact of tariffs on financials - Approximately half of the estimated $22 million tariff impact is attributed to exposure in China, with the remainder from other international imports [66][86] Question: Ship hold increase and organic growth outlook - The increase in ship holds is projected to have an annual impact of $55 million to $70 million, which has been factored into the organic growth outlook [94][96]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was approximately $383 million, reflecting a reported growth of 3.7% and an organic decline of 3.5% compared to the previous year [7][23] - Adjusted EPS for the quarter was $0.41, down 25% compared to 2024 [23] - Gross margins were 52.2%, down 220 basis points from 2024, impacted by manufacturing variances and increased network optimization spending [24] - Adjusted EBITDA margins were 16.6%, down 290 basis points compared to 2024 [24] - Operating cash flow for Q1 was negative $11.3 million [24] Business Line Data and Key Metrics Changes - Codman Specialty Surgical (CSS) segment reported revenues of $281 million, with a reported growth of 9.4% and an organic decline of 1.1% [25] - Tissue Technologies revenues were $102 million, down approximately 9% on both a reported and organic basis [28] - The ENT business saw approximately $29 million in revenue from the Aclaren acquisition, with organic growth being flat due to supply constraints [25] Market Data and Key Metrics Changes - Global neurosurgery revenues declined 4.7% organically, primarily due to ship holds affecting several product lines [25] - International performance within CSS declined by high single digits, attributed to the timing and duration of ship holds [27] - Sales in wound reconstruction were down due to Integra Skin and ship holds on other products [28] Company Strategy and Development Direction - The company is focused on a turnaround strategy, emphasizing portfolio prioritization and disciplined program management to enhance operational execution [9][10] - A compliance master plan is in place to address quality system regulations and FDA observations, with significant progress reported in site assessments [12][14] - Investments are being made in manufacturing infrastructure to support long-term sustainable growth [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the specialized product portfolio despite current challenges [8] - The anticipated revenue headwinds from ship holds are within the assumptions made when setting guidance [20] - The company expects a revenue range of $390 million to $400 million for Q2 2025, reflecting a decline due to ship holds [19][35] Other Important Information - The company identified additional ship holds for certain products, now expecting total ship holds for the year to be between $55 million and $70 million [13][36] - The impact of recently announced global tariffs has been incorporated into the updated 2025 guidance, estimated at approximately $22 million [20][33] Q&A Session Summary Question: Guidance for Q2 and confidence in the second half of the year - Management acknowledged the impact of newly identified ship holds on Q2 guidance but noted that the guidance reflects improved production and normal seasonality [44][45] Question: Tariff impact and mitigation efforts - Management confirmed that several mitigation strategies are being pursued, including tariff exemptions and sourcing optimization, but did not include their impacts in the current guidance [47][49] Question: Demand for private label products - Management anticipates a step-up in private label demand in the second half of the year, although the forecast has been adjusted to reflect a low single-digit decline for the full year [53] Question: Remediation efforts and FDA compliance - Management is on track to complete assessments and remediation plans by year-end, with ongoing dialogue with the FDA regarding compliance [78][80] Question: Impact of ship holds on revenue guidance - Management indicated that the updated guidance allows for additional supply disruptions while still achieving the high end of the revenue range [71]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 was $443 million, representing year-over-year reported growth of 11.5% and organic growth of 3.5% [24][35] - Full year 2024 revenues were $1.61 billion, reflecting 4.5% growth on a reported basis and a decline of 1.3% on an organic basis [29][30] - Adjusted EPS for Q4 was $0.97, up 9% compared to 2023, and adjusted EPS for the full year was $2.56, down 17.4% versus 2023 [25][32] Business Line Data and Key Metrics Changes - In the CSS business, Q4 revenues were $314.7 million, an increase of 15.8% on a reported basis and 4.1% on an organic basis [38] - Tissue Technologies grew 2% on both a reported and organic basis in Q4, with the Wound Reconstruction franchise increasing by 8.2% [42] Market Data and Key Metrics Changes - International sales in CSS were down low single digits due to delayed clearance of shipping holds [41] - The company expanded its international commercial footprint in Brazil, India, Korea, and China, enhancing its global presence [20] Company Strategy and Development Direction - The company is focused on operational excellence, executing a compliance master plan, and enhancing manufacturing capacity [68][69] - There is a commitment to invest in innovation and global expansion while addressing operational challenges [53][54] - The company aims to regain market share and drive growth with differentiated products, particularly in the implant-based breast reconstruction market [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that recent performance has not met expectations and emphasized the need for improvements in quality, manufacturing, and supply chain [11][13] - The company expects Q1 2025 revenues to be between $375 million and $385 million, with organic growth projected to be negative [27][46] - For the full year 2025, revenues are projected to be between $1.65 billion and $1.72 billion, reflecting continued demand for its differentiated portfolio [48] Other Important Information - The company is investing in facility equipment upgrades to enhance quality and capacity, with plans to bring the Braintree facility online in the first half of 2026 [18][22] - The company has established a new standing quality committee to reinforce oversight and accountability [22] Q&A Session Summary Question: Concerns about Integra Skin and shipping holds in 2025 - Management acknowledged the planned maintenance shutdown and lower safety stock levels may prevent meeting demand in Q1, but expects production constraints to diminish throughout the year [61][62] Question: Key strategic initiatives for 2025 - The focus will be on operational excellence, maintaining leadership in core markets, and introducing differentiated new products [68][69] Question: Impact of potential tariffs on manufacturing - The company does not have manufacturing facilities in Mexico or Canada but sources components from those countries and is assessing potential impacts [73][74] Question: Future shipping holds and quality issues - Management indicated that the compliance master plan's assessment phase could lead to potential supply disruptions, although no specific issues are currently known [78][79] Question: Cash flow expectations for 2025 - The company expects operating cash flow and free cash flow to improve in 2025, with a step-up in free cash flow conversion anticipated in Q4 2025 [82][84] Question: Acclarent's growth profile in 2025 - Acclarent is expected to grow at high single digits in 2025, aligning with business expectations and synergies from integration [90][91] Question: Recovery pathway for private label - The private label business is expected to grow at mid-single digit rates, with component supply delays anticipated to be resolved by the second half of 2025 [115][116]