CVRx Conference Call Summary Company Overview - **Company**: CVRx - **Industry**: Cardiovascular medical devices - **Product**: Barostim, a neuromodulation therapy for heart failure - **Annual Total Addressable Market (TAM)**: $2.2 billion [1][5] Key Points and Arguments Heart Failure Market - Heart failure leads to over 1 million hospitalizations, 1.3 million emergency room visits, and 8 million physician office visits in the U.S. annually, with spending projected to reach approximately $70 billion by the end of the decade [1] - Heart failure is a progressive disease with significant mortality rates, exceeding those of the top five cancers [1] Treatment Landscape - Current treatment involves quad therapy (four Class I drugs), but only 1% of patients reach therapeutic doses, and 40% discontinue at least one drug within the first year [3] - Patients express a preference for a higher quality of life over mere life extension [4] - Barostim targets the "forgotten middle" of heart failure patients, aiming to restore quality of life [4] Clinical Evidence and Efficacy - Barostim has shown a 68% improvement in New York Heart Class functional status and a 94% response rate among patients [10] - A real-world study indicated an 85% reduction in hospitalization rates post-implantation of Barostim [11] - The therapy operates by restoring signaling from baroreceptors to the brain, effectively reducing sympathetic tone and neurohormonal toxicity [8][9] Go-to-Market Strategy - CVRx is focusing on building a specialized sales organization and deepening adoption in targeted accounts rather than broad distribution [12][13] - The company has identified 300-400 centers in the U.S. with the highest potential for Barostim adoption based on patient volume and experience with similar devices [15][16] Barriers to Adoption - Key barriers include therapy awareness, clinical evidence, patient access, and reimbursement issues [18][19] - Significant outreach efforts are being made to educate referral physicians and advanced practice providers [20] Reimbursement Developments - Secured a permanent inpatient DRG reimbursement of $43,000 and an outpatient code at $45,000 [24] - Transitioning to a permanent category one procedural code on January 1, which will enhance payment certainty for surgeons and reduce prior authorization denials [25][26] Financial Performance - Reported Q3 revenue of $14.7 million, with guidance for Q4 revenue between $15 million and $16 million [27] - Gross margin reported at 87%, with a cash balance of $85 million [27] Additional Important Information - The therapy has a remarkable 97% freedom from complications during implantation [9] - The company is actively generating further clinical evidence to support the therapy's efficacy and safety [21][22][23]

Core Insights - Abbott's Q3 2025 financial report shows a global sales of $11.369 billion, a year-on-year increase of 6.9%, with organic growth of 5.5% excluding foreign exchange impacts [2] - The adjusted diluted earnings per share (EPS) is $1.30, reflecting a 7.4% increase year-on-year, and the operating margin improved to 23.0% [2] - The company maintains its full-year guidance, expecting organic growth of 7.5%–8.0% excluding COVID-19 testing impacts, with adjusted EPS narrowed to $5.12–$5.18, indicating double-digit growth [2][24] Business Breakdown Medical Devices - Medical device sales reached $5.448 billion, a 14.8% increase year-on-year, with organic growth of 12.5%, making it the core driver of overall performance [4] - Key growth areas include diabetes care, particularly the continuous glucose monitoring (CGM) products, which generated approximately $2.057 billion in sales [4][6] Diagnostics - Diagnostics sales totaled $2.253 billion, down 6.6% year-on-year, primarily due to a significant decline in COVID-19 testing revenue [8] - Excluding COVID-19 testing, the diagnostics business showed slight positive growth of 0.4%, indicating resilience in core operations [8] Nutrition - Nutrition sales amounted to $2.153 billion, with organic growth of 4.0%, driven by strong performance in adult nutrition products [10] - Adult nutrition products like Ensure and Glucerna are gaining traction among aging and diabetes management populations [10] Established Pharmaceuticals - International sales in established pharmaceuticals reached $1.511 billion, with a year-on-year growth of 7.5% and organic growth of 7.1%, particularly in emerging markets [13] - The strategy of high-quality prescription drugs combined with local manufacturing is enhancing brand recognition [13] Regional and Profit Performance - International market revenue was $7.070 billion, accounting for over 60% of total sales, with a growth of 9.9% [17] - The U.S. market grew by 2.3%, reflecting a recovery in routine business post-pandemic [17] - The adjusted operating margin improved to 23.0%, with R&D expenses increasing by 7.5%, indicating continued investment in core innovation projects [17] Future Outlook - Management believes that the sustained growth in the medical device sector, steady recovery in diagnostics, and stable performance in nutrition and generics will support achieving the expected full-year performance [18] - Key variables for medium to long-term performance include the expansion of structural heart indications and the penetration rate of CGM products [22]

Financial Data and Key Metrics Changes - The company reported organic sales growth of 7.5% excluding COVID test sales, with earnings per share rising to $1.30, reflecting high single-digit growth compared to last year [5][13] - Adjusted gross margin was 55.8% of sales, showing a decrease from the prior year due to tariffs, while adjusted operating margin increased by 40 basis points to 23% [14][48] Business Line Data and Key Metrics Changes - Nutrition sales increased by 4%, driven by a 10% growth in international markets, particularly in adult nutrition products like Ensure and Glucerna [6][7] - Diagnostics experienced modest sales growth excluding COVID testing, with core lab diagnostics growing 7% outside of China, while point-of-care diagnostics grew by 8% [7][8] - Established Pharmaceuticals (EPD) sales increased by 7%, led by double-digit growth in key markets, with strong contributions from therapeutic areas like gastroenterology and cardiometabolic [8][9] - Medical devices saw a 12.5% sales growth, with significant contributions from diabetes care and electrophysiology [9][10] Market Data and Key Metrics Changes - The U.S. diagnostics market grew by 10%, while the European region saw growth of 6% to 7%, and Latin America grew in the mid-teens [44] - In China, the company faced challenges due to VBP pricing dynamics, but growth in other segments like EPD and nutrition remained strong, with an overall growth rate of around 5% to 7% when excluding diagnostics [61][62] Company Strategy and Development Direction - The company aims to sustain high single-digit organic sales growth and double-digit EPS growth, supported by new product launches and a strong existing portfolio [21][22] - Investments in innovation and clinical trials are expected to drive future growth, with nearly 200 clinical trials planned across various businesses [21][23] - The company is focused on expanding its market share in key areas such as diabetes care and electrophysiology, with new product launches like Volt expected to enhance growth [19][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting consensus estimates for 2026, citing underlying momentum in the current portfolio and easing headwinds from diagnostics [18][19] - The company anticipates a recovery in the diagnostics business as it laps previous headwinds, with expectations for mid-to-high single-digit growth next year [45] - Management highlighted the importance of adapting to market conditions and maintaining a resilient portfolio to drive growth [19][23] Other Important Information - The company has launched new products that generated nearly half a billion dollars in sales this quarter, contributing significantly to organic sales growth [6] - Regulatory approvals for new medical devices, such as Triclip in Japan and expanded indications for TAVR, are expected to enhance market position [10][11] Q&A Session Summary Question: Thoughts on 2026 sales and EPS consensus - Management is comfortable with the consensus estimates for 2026, expecting to deliver similar growth rates as in 2025 despite headwinds faced this year [18] Question: Insights on U.S. diabetes market growth - U.S. diabetes care grew by 19%, with expectations for continued strong growth driven by new product launches and increased penetration in the basal segment [26][28] Question: Drivers of ablation catheter growth - Double-digit growth in ablation catheters is driven significantly by international markets, with a strong competitive position in mapping cases [52][53] Question: Outlook for diagnostics business in China - Management expects mid-single-digit growth in China, focusing on expanding contributions from other geographies while navigating current challenges [62] Question: Update on nutrition litigation and market performance - The company remains committed to defending its products amid ongoing litigation, with pockets of softness in nutrition being addressed through strategic investments [80]

Group 1 - The buy-and-hold investment strategy is advantageous as it simplifies investing, reduces exposure to market volatility, limits fees and taxes, and benefits from compounding, especially when dividends are reinvested [1] - Abbott Laboratories is highlighted as a strong candidate for long-term investment due to its stability and growth potential in the healthcare sector [2][3] Group 2 - Abbott Laboratories is a well-established leader in the medical device industry, with a strong reputation and established relationships with healthcare professionals, providing a competitive advantage [5] - The company demonstrates a strong innovative capacity, with industry-leading products such as the MitraClip and Amplatzer Occluder devices, which address specific medical needs through minimally invasive techniques [6] - Abbott's FreeStyle Libre continuous glucose monitoring systems are recognized as a significant advancement in diabetes management, achieving record sales and showcasing the company's ability to generate robust financial results [7][8]

Core Insights - Abbott's third-quarter results for 2025 show a total worldwide sales increase of 6.9% to $11.369 billion compared to $10.635 billion in the same quarter of 2024 [23] - The company reported a GAAP diluted EPS of $0.94 and an adjusted diluted EPS of $1.30, reflecting a 7.4% increase from the previous year [7][24] - Abbott reaffirms its full-year 2025 organic sales growth guidance of 7.5% to 8.0%, excluding COVID-19 testing-related sales [17] Financial Performance - Total reported sales for the third quarter were $11.369 billion, with U.S. sales at $4.299 billion and international sales at $7.070 billion [4] - The organic sales growth was 5.5%, or 7.5% when excluding COVID-19 testing-related sales [7] - Year-to-date sales for the first nine months of 2025 reached $32.869 billion, a 6.1% increase from $30.976 billion in the same period of 2024 [24] Segment Performance - Nutrition segment sales for Q3 2025 were $2.153 billion, with U.S. sales declining by 6.5% and international sales increasing by 13.3% [6][9] - Diagnostics segment reported sales decreased by 6.6% to $2.253 billion, with a notable decline in COVID-19 testing sales from $265 million in Q3 2024 to $69 million in Q3 2025 [10][11] - Medical Devices segment sales increased by 14.8% to $5.448 billion, driven by strong growth in Diabetes Care and other areas [15][16] Guidance and Future Outlook - Abbott has narrowed its full-year 2025 adjusted diluted EPS guidance range to $5.12 to $5.18, indicating double-digit growth at the midpoint [7][17] - The company received regulatory approvals for new products, including TriClip and an expanded indication for the Navitor TAVI system, which are expected to contribute to future growth [7] Dividend Information - Abbott declared a quarterly dividend of $0.59 per share, marking the 407th consecutive quarterly dividend, with a history of increasing dividends for 53 consecutive years [19]

Core Insights - Abbott Laboratories (ABT) reported a gross profit of $6.29 billion in Q2, reflecting an 8.9% year-over-year increase, with a gross margin expansion to 56.4% driven by a favorable product mix, particularly in the Medical Devices segment [1][9] Financial Performance - The cost of products sold increased by 5.4% (excluding amortization), yet gross margin improved by 79 basis points (bps) [1][4] - Strong growth in diabetes care, structural heart, and electrophysiology within the Medical Devices segment contributed significantly to profitability [1][2] - The Nutrition business benefitted from continued demand for higher-margin products like Ensure and Glucerna [2] Market Conditions - Improved foreign exchange conditions, particularly a weaker U.S. dollar, provided a modest tailwind, contributing a 0.5% favorable year-over-year impact on sales [3] - Cost discipline in manufacturing and reduced COVID testing impact supported the gross margin improvement despite macroeconomic challenges such as tariffs and pricing pressures in China [4] Peer Comparison - Thermo Fisher (TMO) experienced a gross margin contraction of 83 bps to 41.2% due to declining COVID-related revenues, despite growth in core businesses [5] - Boston Scientific (BSX) saw a gross margin decline of 152 bps to 67.7%, primarily due to inventory charges from the discontinuation of its ACURATE valve, although underlying performance remained strong in high-margin areas [6] Stock Performance - Abbott's shares increased by 16.8% over the past year, outperforming the industry growth of 4.1% and the S&P 500's growth of 15.6% [7][9] Valuation Metrics - Abbott currently trades at a forward Price-to-Sales (P/S) ratio of 4.88X, below the industry average of 5.61X [10]

Core Viewpoint - Abbott reported strong Q2 2025 financial results with total revenue of $11.142 billion, a year-over-year increase of 7.4%, driven by robust performance in medical devices and nutrition segments [1][2]. Financial Highlights - Total revenue reached $11.142 billion, with organic growth of 6.9%, exceeding market expectations [1][2]. - Adjusted EPS for Q2 2025 was $1.26, with full-year guidance raised to $5.10 to $5.20 [3]. - The company expects sales growth of 7.5% to 8% for the full year [3]. Medical Devices Performance - Medical devices segment generated $5.67 billion in revenue, with organic growth of 13.4%, making it the strongest performing segment [4]. - Key areas of growth included structural heart and diabetes management, with notable sales in the heart rhythm management and electrophysiology sectors [5][6]. Nutrition and Diagnostics - Nutrition segment revenue was $2.212 billion, a year-over-year increase of 2.9%, driven by strong growth in adult nutrition products [10]. - Diagnostics segment revenue was $2.173 billion, a slight decline of 1% due to a significant drop in COVID-19 testing sales, but core diagnostics showed growth [8][9]. Pharmaceutical Segment - Established pharmaceuticals revenue was $1.383 billion, with organic growth of 6.9%, primarily in emerging markets [12]. Key Developments - Abbott is advancing multiple product developments in cardiovascular interventions and electrophysiology, with significant progress in clinical trials and product registrations [13][15][19]. - The company is focusing on innovative technologies in non-invasive interventions and remote chronic disease management, aligning with market trends [20]. Company Overview - Abbott operates across four major sectors: nutrition, diagnostics, pharmaceuticals, and medical devices, with a strong emphasis on medical technology as a key growth area [21].

Financial Data and Key Metrics Changes - The company achieved high single-digit sales growth, with adjusted earnings per share of $1.26, reflecting an 11% increase year-over-year and exceeding consensus estimates [8][18] - Adjusted gross margin increased by 100 basis points to 57% of sales, while adjusted operating margin also rose by 100 basis points to 22.9% of sales [19][20] - Sales growth excluding COVID testing was 7.5% in Q2 and 8% in the first half of the year [8][18] Business Line Data and Key Metrics Changes - Nutrition sales increased by 3.5%, driven by a 6.5% growth in adult nutrition [9] - Diagnostics sales declined by 1.5%, primarily due to a decrease in COVID testing sales and volume-based procurement in China, with a projected headwind of approximately $700 million for the full year [10] - Established Pharmaceuticals Division (EPD) saw nearly 8% sales growth, particularly in key markets like India and China [11] - Medical devices sales grew by 12%, with notable growth in diabetes care and heart failure segments [12][16] Market Data and Key Metrics Changes - Core Lab Diagnostics grew by 8% excluding China, indicating strong underlying demand globally [10][32] - The U.S. market for diabetes care saw a 19.5% increase in continuous glucose monitors [12] - The company reported strong performance in international markets, particularly in Latin America and Asia, which are expected to drive future growth [11] Company Strategy and Development Direction - The company is focused on sustainable growth with targets of high single-digit growth, healthy margin expansion, and double-digit EPS growth [15][20] - There is a commitment to expanding the biosimilars portfolio and launching new products across various segments, including diabetes and electrophysiology [11][28] - The company is exploring M&A opportunities selectively, aiming for strategic fits that generate attractive returns [79] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from COVID testing declines and challenges in the China market but remains optimistic about achieving high single-digit growth despite these challenges [26][28] - The company expects to see recovery in certain markets and product lines, with a positive outlook for 2026 as headwinds dissipate [29][32] - Management emphasized the importance of innovation and product launches in driving future growth [11][90] Other Important Information - The company is making significant investments in R&D and expanding its product portfolio, particularly in structural heart and electrophysiology [90][101] - The dual analyte sensor is expected to be a significant innovation in the continuous glucose monitoring market, with ongoing clinical trials [112] Q&A Session Summary Question: Context for 2025 performance and headwinds - Management discussed the impact of COVID testing declines and challenges in the China market, estimating over $1 billion in headwinds but still forecasting high single-digit growth [24][26] Question: Potential for growth acceleration into 2026 - Management indicated that there is a scenario for growth acceleration as headwinds fade and new product launches gain traction [35][36] Question: Trends in diabetes and electrophysiology products - Management reported strong growth in diabetes care, particularly with the Libre product, and positive trends in electrophysiology with the Volt catheter [42][48] Question: Competitive bidding for CGM and potential impacts - Management noted that competitive bidding for CGM is expected to take time to implement and will primarily affect DMEs rather than manufacturers [57] Question: Update on CRM product conversion and growth expectations - Management highlighted a significant increase in the uptake of the Avera leadless pacemaker and expects continued growth in the CRM market [64][66] Question: M&A opportunities and strategic focus - Management expressed a strong interest in M&A opportunities that align with strategic goals and profitability, while also focusing on organic growth [79][80]

Financial Data and Key Metrics Changes - The company achieved high single-digit sales growth, with adjusted earnings per share of $1.26, reflecting an 11% increase year-over-year and exceeding consensus estimates [6][18] - Adjusted gross margin increased by 100 basis points to 57% of sales, while adjusted operating margin also rose by 100 basis points to 22.9% of sales [19][20] - Sales growth excluding COVID testing was 7.5% in Q2 and 8% in the first half of the year [6][18] Business Line Data and Key Metrics Changes - Nutrition sales increased by 3.5%, driven by a 6.5% growth in adult nutrition [7] - Diagnostics sales declined by 1.5%, primarily due to a decrease in COVID testing sales and volume-based procurement in China, with a projected headwind of approximately $700 million for the full year [8][9] - Established Pharmaceuticals Division (EPD) saw nearly 8% sales growth, particularly in key markets like India and China [10] - Medical devices sales grew by 12%, with notable growth in diabetes care and heart failure segments [11][12] Market Data and Key Metrics Changes - Core Lab Diagnostics grew by 8% excluding China, indicating strong underlying demand globally [9] - The U.S. dollar's weakening had a favorable impact on sales, contributing to a 0.5% year-over-year increase in Q2 sales [18] - The company noted high teens growth in Latin America and strong performance in the European region [32] Company Strategy and Development Direction - The company aims for high single-digit growth, healthy margin expansion, and double-digit EPS growth as part of its long-term sustainable growth objectives [16] - There is a focus on expanding the biosimilars portfolio and launching new products, with significant regulatory submissions planned for emerging markets [10] - The company is committed to maintaining leadership in the structural heart market through innovation and strategic investments [97] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from COVID testing sales decline and changes in foreign aid funding for HIV testing, but remains optimistic about achieving high single-digit growth despite these headwinds [28][30] - The company expects to see headwinds dissipate by 2026, with a strong pipeline of product launches anticipated to drive growth [30][34] - Management expressed confidence in the performance of the Core Lab business and the overall healthcare system's importance [33] Other Important Information - The company is exploring M&A opportunities in diagnostics and medical devices, focusing on strategic fit and profitability [79][80] - The dual analyte sensor is expected to significantly impact the continuous glucose monitoring market, with ongoing clinical trials supporting its development [113][114] Q&A Session Summary Question: Context for 2025 performance - Management discussed headwinds from COVID testing and challenges in the China Core Lab market, emphasizing the goal of reliable and sustainable growth despite these factors [22][24] Question: Potential for growth acceleration into 2026 - Management indicated that there is a scenario for growth acceleration as headwinds fade and new product launches gain traction [34][36] Question: Trends in diabetes and electrophysiology (EP) products - Management highlighted strong growth in diabetes care, particularly with the Libre product, and positive trends in EP with the Volt catheter [40][48] Question: Competitive bidding for CGM and its implications - Management noted that competitive bidding would primarily affect DMEs rather than CGM manufacturers, and they are prepared to adapt [57] Question: Update on CRM business and growth expectations - Management expressed confidence in the CRM business's growth trajectory, supported by innovation and increased physician training [64][66] Question: M&A strategy and potential targets - Management confirmed a focus on diagnostics and devices for M&A opportunities, emphasizing the importance of strategic fit and profitability [79][80]

AbbVie - AbbVie is a pharmaceutical leader with a strong portfolio, particularly in immunology with products Skyrizi and Rinvoq, achieving a revenue increase of 8.4% year-over-year to $13.3 billion in Q1, with adjusted earnings per share at $2.46, a 6.5% increase [3][4] - Skyrizi generated $3.4 billion in sales, a 70.5% year-over-year increase, while Rinvoq's revenue was $1.7 billion, up 57.2% year-over-year; management forecasts combined annual sales exceeding $31 billion by 2027, significantly higher than the previous year's $17.7 billion [4][5] - AbbVie has a deep pipeline with approximately 90 products in development, allowing it to navigate patent cliffs and maintain long-term success [5][7] - AbbVie has increased its dividends by 310% since 2013 and has a track record of 53 consecutive years of payout increases, indicating strong potential for sustained passive income [8] Abbott Laboratories - Abbott Laboratories is a leader in the medical device space, with a diversified operation across diagnostics, pharmaceuticals, and nutrition, which helps mitigate challenges in specific segments [9][10] - The diabetes care segment, particularly the FreeStyle Libre continuous glucose monitoring system, has been a significant growth driver, becoming the most successful medical device in history in terms of dollar sales [11][12] - Abbott has increased its dividends by almost 146% over the past decade, reinforcing its reputation as a Dividend King and indicating a strong foundation for long-term dividend growth [13]