Financial Data and Key Metrics Changes - The company reported Q1 2025 sales of $2.1 billion, reflecting a 4.3% increase on an organic basis and a 2.6% increase on a reported basis [26] - Adjusted earnings per share (EPS) for the quarter was $1.34, exceeding expectations [32] - Gross margins were 55.6% of sales, slightly ahead of expectations but down 260 basis points compared to the prior year [30] - The company ended the quarter with $534 million in cash and equivalents, with no outstanding borrowings on its revolving credit facility [32] Business Line Data and Key Metrics Changes - The MedSurg segment generated $1.2 billion in sales, a 6% organic growth, primarily driven by Infection Prevention and Surgical Solutions, which grew 8.2% [28] - The Dental Solutions segment reported $328 million in revenue, with a modest 0.4% organic growth, supported by new product launches [28] - The Health Information Systems (HIS) segment contributed $329 million in revenue, reflecting a 3.9% organic growth, benefiting from strong customer retention [29] - The Purification and Filtration segment delivered $242 million in sales, a 2.2% organic growth, led by bioprocessing filtration [29] Market Data and Key Metrics Changes - The company experienced a favorable foreign exchange impact, which was initially a headwind of 160 basis points but is now expected to have a neutral impact on sales growth for the year [26][35] - The overall market volumes remain challenged, particularly in the Dental segment, but the company is seeing resilience in its core restorative areas [28][84] Company Strategy and Development Direction - The company is committed to its three-phase transformation plan, focusing on enhancing its mission, talent, and commercial productivity [12][21] - The strategic focus includes investing in key growth areas and maintaining a commitment to delivering value for shareholders [12][13] - The company plans to execute tuck-in M&A after the divestiture of the Purification and Filtration business, expected to close by the end of 2025 [22][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tariffs but expressed confidence in mitigating their impact through various strategies [9][36] - The company raised its full-year organic sales growth guidance to a range of 1.5% to 2.5%, reflecting positive momentum across business segments [34] - Management emphasized the importance of delivering for customers and investing in sustainable growth despite a shifting geopolitical landscape [12][13] Other Important Information - The company has exited over 30% of its transition service agreements and plans to exit all agreements over the next two years [25] - The effective tax rate for the quarter was 19.9%, slightly below the low end of the full-year outlook [31] Q&A Session Summary Question: Confidence in underlying growth rate - Management expressed confidence in the 2.5% underlying growth rate, attributing it to strong commercial execution and customer order patterns [41][43] Question: Quarterly cadence and impact of tariffs - Management clarified that tariffs primarily impact the bottom line rather than top-line growth, with expectations for Q3 to see the most significant effects [47][50] Question: Top line drivers in MedSurg - Management highlighted improvements in commercial execution and new product launches as key drivers for growth in the MedSurg segment [59][61] Question: Tariff impact and mitigation efforts - Management discussed ongoing mitigation strategies, including optimizing inventory and exploring selective pricing strategies to offset tariff impacts [67][71] Question: Performance in Dental segment relative to market - Management indicated that the Dental segment performed well relative to the market, supported by new product innovations [82][84]

Financial Data and Key Metrics Changes - The company reported first quarter sales of $2.1 billion, reflecting a 4.3% increase on an organic basis and a 2.6% increase on a reported basis [25] - Adjusted earnings per share (EPS) for the quarter was $1.34, exceeding expectations [31] - Gross margins were 55.6% of sales, slightly ahead of expectations but down 260 basis points compared to the prior year [29] Business Segment Data and Key Metrics Changes - The MedSurg segment generated $1.2 billion in sales, an increase of 6% on an organic basis, driven by strong performance in Infection Prevention and Surgical Solutions [27] - The Dental Solutions segment reported $328 million in revenue, a 0.4% increase on an organic basis, benefiting from new product launches despite market challenges [28] - The Health Information Systems (HIS) segment contributed $329 million in revenue, a 3.9% organic growth, supported by strong customer retention [28] - The Purification and Filtration segment delivered $242 million in sales, a 2.2% organic growth, led by bioprocessing filtration [28] Market Data and Key Metrics Changes - The company experienced a favorable foreign exchange impact, with currency now estimated to have a neutral effect on sales growth for the year, compared to a previous estimate of a 150 basis point headwind [34] - The overall market volumes remain challenged, particularly in the Dental segment, but the company is seeing resilience in its core restorative areas [28][84] Company Strategy and Development Direction - The company is committed to investing in key areas to support sustainable growth and margin improvement, focusing on five growth driver areas [12][21] - The ongoing separation process is on track, with over 30% of transition service agreements exited and significant progress in ERP deployments planned for the year [24] - The company anticipates completing the divestiture of the Purification and Filtration business by the end of 2025, which will allow for tuck-in M&A opportunities [19][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the headwinds from tariffs but expressed confidence in managing these challenges through mitigation strategies and strong business momentum [8][34] - The company raised its full-year organic sales growth guidance to a range of 1.5% to 2.5%, reflecting positive volume-driven performance across business segments [32] - Management emphasized the importance of delivering for customers and maintaining focus on long-term value creation despite short-term challenges [11][38] Other Important Information - The company has made cumulative repayments of $400 million on its $1.5 billion prepayable term loans, ending the quarter with $534 million in cash and equivalents [31] - Free cash flow for Q1 declined by $80 million, consistent with expectations due to planned payments and one-time separation costs [31] Q&A Session Summary Question: Confidence in underlying growth rate - Management expressed confidence in the 2.5% underlying growth rate, attributing it to strong commercial execution and analytics from distributor partners [40][42] Question: Quarterly cadence and impact of tariffs - Management clarified that tariffs primarily impact the bottom line, with expectations for most order timing impacts to be realized in Q3 [48][49] Question: Top line drivers in MedSurg - Management highlighted improvements in commercial execution and new product launches as key drivers for growth in the MedSurg segment [60][62] Question: Tariff impact and mitigation efforts - Management discussed ongoing mitigation strategies, including optimizing inventory and exploring selective pricing strategies to offset tariff impacts [68][72] Question: Performance in Dental segment relative to market - Management indicated that the Dental segment performed well relative to the market, supported by new product innovations [84]

Financial Data and Key Metrics Changes - Fourth quarter 2024 sales were $2.1 billion, an increase of 2.3% on an organic basis and 1.9% on a reported basis, reflecting positive momentum [40] - Gross margin was 56.2%, slightly ahead of expectations but down 100 basis points year-over-year [45] - Adjusted operating income was $422 million, translating to an operating margin of 20.4%, slightly ahead of expectations [47] - Earnings per share were $1.41, exceeding expectations [48] - The company ended the year with $762 million in cash and equivalents and no outstanding borrowings on its credit facility [50] Business Segment Data and Key Metrics Changes - MedSurg segment delivered $1.2 billion in sales, an increase of 1.8% on an organic basis, driven by higher OEM and advanced wound care [42] - Dental segment generated $315 million in revenue, up 4.2% on an organic basis, benefiting from recent product launches [43] - Health Information Systems segment contributed $336 million in revenue, an increase of 1.1% on an organic basis, aided by the adoption of the revenue cycle management platform [44] - Purification & Filtration segment achieved $235 million in sales, a 3.5% organic increase, supported by strong demand in bioprocessing filtration [44] Market Data and Key Metrics Changes - The company experienced a 60 basis point headwind from foreign exchange due to a stronger U.S. dollar [41] - The overall market environment remains complex, with the company focusing on improving commercial excellence and leveraging R&D for growth [94][96] Company Strategy and Development Direction - The company is focused on a three-phase transformation strategy aimed at establishing a foundation for success, unlocking profitable growth, and optimizing its portfolio [23][29][33] - The divestiture of the Purification & Filtration business is part of the strategy to streamline focus and improve key metrics [33] - The long-term strategy will be unveiled at the upcoming Investor Day on March 20, 2025 [31][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain volume growth and improve margins, despite challenges from the separation process [62] - The company anticipates organic sales growth of 1% to 2% for 2025, with a normalized outlook of 1.5% to 2.5% [55][56] - Management emphasized the importance of commercial excellence and R&D innovation as key drivers for future growth [94][96] Other Important Information - The company plans to exit all transition service agreements over the next two years as part of the separation process [38] - The anticipated impact of the divestiture on earnings per share is expected to be neutral in 2025 [59][126] - The company is not planning to initiate dividends or stock buybacks, as proceeds from the divestiture will primarily be used to repay debt [141] Q&A Session Summary Question: Can you provide a breakdown of organic growth by segment? - Management stated that they are not providing segment-level guidance but expect improvements across all segments due to ongoing initiatives [67][69] Question: What explains the lighter free cash flow guidance? - The lighter guidance is attributed to increased separation costs, with a focus on modeling non-GAAP separation-related costs from Q4 into 2025 [73][75] Question: Will the SKU rationalization impact operating margins? - Management indicated that while there will be a small benefit in sales growth and margins, the primary goal of SKU rationalization is simplification [81] Question: How ready is the organization for M&A after the divestiture? - The divestiture allows for an accelerated timeline for M&A, with the organization building capacity to pursue smaller transactions [85][87] Question: What factors are influencing topline performance as you exit 2024? - Management highlighted three vectors for growth: commercial excellence, R&D innovation, and M&A, with a focus on leveraging commercial excellence for immediate improvements [94][96] Question: How much of your manufacturing is in Mexico, and what flexibility do you have? - The company has two plants in Mexico and believes it has less exposure to tariffs compared to others, with limited imports from China [138] Question: Are there plans for dividends or stock buybacks post-divestiture? - Management confirmed that proceeds from the divestiture will primarily be used for debt repayment, with no plans for dividends or buybacks due to restrictions from 3M agreements [141]