Q2 2024 Teleflex Inc Earnings Call

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Operator: Good morning, ladies and gentlemen, and welcome to the Teleflex 2nd quarter 2024 earnings conference call. At this time, all participants have been placed in a listen-only mode.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the Teleflex second quarter 2024 earnings conference call.

Operator: At the end of the company's prepared remarks, we will conduct a question-and-answer session.

Speaker Change: At this time, all participants have been placed in a listen-only mode.

Speaker Change: At the end of the company's prepared remarks, we will conduct a question and answer session.

Operator: Please note this conference call is being recorded and will be available on the company's website for replay shortly.

Speaker Change: Please note, this conference call is 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 Kerscher, Vice President of Investor Relations and Strategy Development.

Lawrence Kircher: And now I will turn the call over to Mr. Lawrence Kircher, Vice President of Investor Relations and Strategy Development. Good morning, everyone, and welcome to Teleflex Incorporated 2nd quarter 2024 earnings conference call. The press release in slides to accompany this caller is available on our website at teleflex.com. 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.

Operator: Good morning, everyone, and welcome to Teleflex Incorporated's second quarter 2024 earnings conference. 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 Teleflex 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.

Lawrence Kerscher: Good morning everyone and welcome to Teleflex Incorporated 2nd quarter 2024 earnings conference call.

Speaker Change: The press release and slides to accompany this call are available on our website at teleflex.com.

Speaker Change: 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.

Lawrence Kircher: 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.

Speaker Change: Participating on today's call are Liam Kelly, chairman, president, and chief executive officer, and Thomas Powell, executive vice president and chief financial officer.

Speaker Change: Liam and Tom will provide prepared remarks and then we will open the call to Q&A.

Lawrence Kircher: 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 Teleflex 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.

Speaker Change: 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 Teleflex website.

Speaker Change: 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.

Speaker Change: 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.

Liam Kelly: Now I'll turn the call over to Liam for his remarks. Thank you, Larry, and good morning, everyone. On this morning's call, we will discuss the second quarter results, review some commercial highlights, and provide an update on our financial guidance for 2024.

Speaker Change: Now, I'll turn the call over to Liam for his remarks.

Liam J. Kelly: On this morning's call, we will discuss the second quarter results, review some commercial highlights, and provide an update on our financial guidance for 2021. Before beginning our normal business review, I wanted to highlight a subsequent event following the end of the second quarter, as we have previously disclosed in our SEC filing. The Italian government introduced legislation back in 2015 requiring medical device companies that supply goods and services to the Italian national healthcare system to pay back a portion of their proportional revenues to contribute to funding any deficit created by government budget overspend for medical devices each year. We and numerous other medical device companies challenged the enforceability of the law, primarily on the basis that the legislation was unconstitutional.

Liam Kelly: Thank you, Larry, and good morning, everyone.

Liam Kelly: On this morning's call, we will discuss the second quarter results, review some commercial highlights, and provide an update on our financial guidance for 2024.

Liam Kelly: Before beginning our normal business review, I wanted to highlight a subsequent event following the end of the second quarter. As we have previously disclosed in our SEC filings, the Italian government introduced legislation back in 2015 requiring medical device companies that supply goods and services to the Italian national healthcare system to pay back a portion of their proportional revenues to contribute to funding any deficit created by government budget overspend for medical devices each year. The payment amounts are calculated based on the amount by which the regional ceilings for that given year were exceeded. We and numerous other medical device companies challenged the enforceability of the law.

Liam Kelly: Before beginning our normal business review, I wanted to highlight a subsequent event following the end of the second quarter.

Liam Kelly: as we have previously disclosed in our SEC filings.

Speaker Change: The Italian government introduced legislation back in 2015.

Speaker Change: requiring medical device companies that supply goods and services to the Italian national health care system to pay back a portion of their proportional revenues to contribute

Speaker Change: to funding any deficit created by government budget overspend for medical devices each year.

Speaker Change: The payment amounts are calculated based on the amount by which the regional ceilings for that given year were exceeded.

Speaker Change: We and numerous other medical device companies challenged the enforceability of the law, primarily on the basis that the legislation was unconstitutional.

Liam Kelly: Primarily on the basis that the legislation was on constitution. Today, companies have not been required to pay these amounts while the measure was under consideration by the courts.

Speaker Change: To date, companies have not been required to pay these amounts while the measure was under consideration by the courts.

Liam Kelly: On July 22, the Italian Constitutional Court issued an adverse ruling that supported the legislation related to the payback measure on medical device companies. Although Teleflex has accrued amounts each year since 2015, we are now truing up our reserves to reflect the full amount expected to be invoiced by the Italian government. For the three and six months ended June 30, 2024, we recognize a $15.8 million increase in our reserves and a corresponding reduction to revenue within our EMEA segment related to the Italian payback measure. Of the total increase in our reserves, $13.8 million related to prior years.

Speaker Change: On July 22nd, the Italian Constitutional Court issued an adverse ruling that supported the legislation related to the payback measure on medical device companies.

Liam J. Kelly: Although Teleflex has accrued amounts each year since 2015, we are now truing up our reserves to reflect the full amount expected to be invoiced by the Italian government, making it difficult to contribute to a meaningful evaluation of our operating performance. For the second quarter, Teleflex revenues were $749.7 million, up 0.9% year-over-year on a gap-based basis. Adjusted revenues for the second quarter were $763.5 million, up 2.7% year-over-year on a reported basis and up 3.4% on a constant currency basis.

Speaker Change: Although Teleflex has accrued amounts each year since 2015, we are now truing up our reserves to reflect the full amount expected to be invoiced by the Italian government.

Speaker Change: For the three and six months ended June 30, 2024, we recognized a $15.8 million increase in our reserves.

Speaker Change: and a corresponding reduction to revenue within our EMEA segment related to the Italian payback measure.

Speaker Change: Of the total increase in our reserves, $13.8 million related to prior years.

Liam Kelly: The amount related to the prior years does not represent normal adjustments to revenue and is not recurring in nature, making it difficult to contribute to a meaningful evaluation of our operating performance. Accordingly, we have excluded $13.8 million for the prior years in our adjusted second quarter revenues to facilitate an evaluation of our current operating performance and a comparison to our past operating performance. For the second quarter, Teleflex revenues were $749.7 million of 0.9% year-over-year on a gap basis. When excluding the prior year impact of the Italian payback measure, adjusted revenues for the second quarter were $763.5 million, up 2.7% year-over-year on a reported basis, and up 3.4% on a constant currency basis.

Speaker Change: The amount related to the prior years does not represent normal adjustments to revenue and is not recurring in nature, making it difficult to contribute to a meaningful evaluation of our operating performance.

Speaker Change: Accordingly, we have excluded $13.8 million for the prior years in our adjusted second quarter revenues to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

Speaker Change: For the second quarter, Teleflex revenues were $749.7 million, up 0.9% year-over-year on a gap basis.

Speaker Change: When excluding the prior year impact of the Italian payback measure,

Speaker Change: Adjusted revenues for the second quarter were $763.5 million, up 2.7% year-over-year on a reported basis, and up 3.4% on a constant currency basis.

Liam Kelly: In addition to the $13.8 million booked in the quarter for prior years, the quarter includes $2 million in increased reserves for this measure to true up the first and second quarter revenues. Backing out the 2 million in unplanned reserves for the Italian measure implies second quarter revenues came in slightly above the high end of our $760 to $765 million revenue guidance provided previously. Second quarter adjusted earnings per share was $3.42, a 0.3% increase year over year.

Speaker Change: In addition to the $13.8 million booked in the quarter for prior years, the quarter includes $2 million in increased reserves for this measure to true up the first and second quarter revenues.

Speaker Change: Backing out the $2 million in unplanned reserves for the Italian measure implies second quarter revenues came in slightly above the high end of our $760-$765 million revenue guidance provided previously.

Speaker Change: Second quarter adjusted earnings per share was $3.42, a 0.3% increase year over year.

Liam Kelly: Now, let's turn to a deeper dive into our second quarter revenue results. I will begin with a review of our geographic segment revenues for the second quarter. All growth rates that I refer to are on an adjusted revenue and adjusted constant currency basis unless otherwise noted. America's revenues were $426.8 million, a 0.6% increase year-over-year. Investors familiar with Teleflex will be aware that prior year MSA revenues were booked in the Americas, which results in a difficult year-over-year comparison. The impact from the MSA termination in the second quarter was similar to the first quarter. EMEA revenues of $160.9 million increased 9.8% year-over-year.

Liam J. Kelly: Now, let's turn to a deeper dive into our second quarter revenue results. Investors familiar with Teleflex will be aware that prior year MSA revenues were booked in the Americas, which results in a difficult year-over-year comparison. EMEA revenues of $160.9 million increased 9.8% year-over-year. The growth was driven by a targeted strategy to increase the geographic availability of Teleflex products and improve utilization in Europe. The quarter was primarily impacted by a softer performance in South Korea due to the ongoing impact of the doctor's strike.

Speaker Change: Now let's turn to a deeper dive into our second quarter revenue results.

Speaker Change: I will begin with a review of our geographic segment revenues for the second quarter.

Speaker Change: All growth rates that I refer to are on an adjusted revenue and adjusted constant currency basis, unless otherwise noted.

Speaker Change: America's revenues were $426.8 million, a 0.6% increase year-over-year.

Speaker Change: Investors familiar with Teleflex will be aware that prior year MSA revenues were booked in the Americas, which results in a difficult year-over-year comparison.

Speaker Change: The impact from the MSA termination in the second quarter was similar to the first quarter.

Speaker Change: EMEA revenues of $160.9 million increased 9.8% year-over-year. The growth was driven by a targeted strategy to increase the geographic availability of Teleflex products and improving utilization in Europe .

Liam Kelly: The growth was driven by a targeted strategy to increase the geographic availability of Teleflex products and improving utilization in Europe. Turning to Asia, revenues were $87 million, a 4% increase year-over-year. The quarter was primarily impacted by a software performance in South Korea due to the ongoing impact of the doctor's strike. We estimate that the doctor's strike impacted our impact growth by approximately 5%. Although we anticipate the doctor's strike headwinds to linger through the remainder of this year, we expect the impact to diminish.

Speaker Change: Turning to Asia

Speaker Change: Revenues were $87 million, a 4% increase year-over-year.

Speaker Change: The quarter was primarily impacted by a softer performance in South Korea due to the ongoing impact of the doctor's strike.

Liam J. Kelly: We estimate that the Doctor Strike impacted our APAC growth by approximately 5%. In the quarter, our broad portfolio of vascular access drove growth, including our PICC portfolio and central access. Of note, the endurance recall anniversaried towards the end of the quarter, implying normalized comparisons in the second half of 2020. Turning to anesthesia, growth was led by endotracheal tubes and intriocytes.

Speaker Change: We estimate that the Doctor Strike impacted our APAC growth by approximately 5%.

Speaker Change: Although we anticipate the doctor strike headwinds to linger through the remainder of this year, we expect the impact to diminish.

Liam Kelly: We continue to see Asia as a growth driver for Teleflex and expect growth in the region of approximately 10% for 2024.

Speaker Change: We continue to see Asia as a growth driver for Teleflex and expect growth in the region of approximately 10% for 2024.

Liam Kelly: Now let's move to a discussion on our second quarter revenues by global product category. Commentary and global product category growth for the second quarter will be on a year-over-year adjusted revenue and adjusted currency basis. Starting with vascular access. Revenue increased 4.8% year-over-year to $181.1 million. In the quarter, our broad portfolio of vascular access grow growth, including our peak portfolio and central access. Of note, the endurance recall anniversary towards the end of the quarter, implying normalized comparisons in the second half of 2024. Moving to interventional. Revenue was $141.2 million, an increase of 13.8% year-over-year. In the quarter, our geographic regions had high single digits or better growth as the broad portfolio continues to form well, including contributions from growth drivers such as Manta, complex catheters, right-haired catheters, and inter-orific balloon pumps.

Speaker Change: Now let's move to a discussion on our second quarter revenues by global product category.

Speaker Change: Commentary on global product category growth for the second quarter will be on a year-over-year adjusted revenue and adjusted constant currency basis.

Speaker Change: Starting with vascular access.

Speaker Change: Revenue increased 4.8% year-over-year to $181.1 million. In the quarter, our broad portfolio of vascular access drove growth, including our PICC portfolio and central access.

Speaker Change: Of note, the endurance recall anniversaried towards the end of the quarter, implying normalised comparisons in the second half of 2024.

Speaker Change: Moving to interventional.

Speaker Change: Revenue was $141.2 million, an increase of 13.8% year-over-year.

Speaker Change: In the quarter, our geographic regions had high single-digit or better growth as the broad portfolio continues to perform well, including contributions from growth drivers such as Manta, Complex Catheters, Right Heart Catheters, and Intraortic Balloon Pumps.

Liam Kelly: Turning to anesthesia. Revenue increased 2.3% year-over-year to $102.5 million. Growth was led by endotracheal tubes and intraosseous. Of note, we anniversary V-T-2 recalls towards the end of the quarter. In our surgical business, revenue was $111.3 million, an increase of 6.4% year-over-year. Our underlying trends in our core surgical franchise continue to be solid, with growth of our largest franchises led by instrumentation and chest drainage. Although GLP-1s continue to negatively impact sleeve gastroectomy proceeds. Partners, Titan Stapler revenue growth in the second quarter was a creative to the growth profile of our surgical business, as well as the corporate average.

Speaker Change: Turning to anesthesia.

Speaker Change: Revenue increased 2.3% year-over-year to $102.5 million.

Liam J. Kelly: Of note, we honorversary the E.T. Tube recalls towards the end of the quarter. In our surgical business, revenue was $111.3 million. Turning now to some commercial and clinical.

Speaker Change: Growth was led by endotracheal tubes and intraosseous.

Speaker Change: Of note, we honor birthday of the E.T. Tube recalls towards the end of the quarter.

Speaker Change: In our surgical business, revenue was $111.3 million, an increase of 6.4% year-over-year.

Speaker Change: Our underlying trends in our core surgical franchise continue to be solid with growth of our largest franchises led by instrumentation and chest drainage.

Speaker Change: Although GLP-1s continue to negatively impact sleeve gastrectomy procedures.

Speaker Change: Titan stapler revenue growth in the second quarter was accretive to the growth profile of our surgical business as well as the corporate average.

Liam Kelly: Consistent with our strategy, we continue to proctor surgeons and roll out our buttress kit following the launch earlier in 2024. For interventional urology, revenue was 83.1 million dollars, representing an increase of 7.1% year over year. Growth was driven by Barry Gel revenue following the October 2023 acquisition of Palette Life Sciences, and as anticipated, your growth was impacted by continued challenges in the Office of Service and Salesforce training activities for Barry Gel during the quarter. OEM revenues increased 5.8% year over year to 88.8 million dollars. The quarter reflects the order timing that we previously communicated with Revenue that we had anticipated in the second quarter, moving into the first quarter.

Speaker Change: Consistent with our strategy, we continue to proctor surgeons and roll out our buttress kit following the launch earlier in 2024.

Speaker Change: For interventional urology, revenue was $83.1 million, representing an increase of 7.1% year over year.

Speaker Change: Growth was driven by Barigel revenue following the October 2023 acquisition of Palette Life Sciences, and, as anticipated, Eurolip growth was impacted by continued challenges in the office side of service and Salesforce training activities for Barigel during the quarter.

Speaker Change: OEM revenues increased 5.8% year-over-year to $88.8 million.

Speaker Change: The quarter reflects the order timing that we previously communicated with revenue that we had anticipated in the second quarter moving into the first quarter.

Liam Kelly: Second quarter other revenue declined 26.4% to 55.5 million dollars year over year. The decline in revenue on a year-over-year basis is primarily due to the planned December 2023 exit of the MSA by Medline.

Speaker Change: Second quarter other revenue declined 26.4% to $55.5 million year-over-year. The decline in revenue on a year-over-year basis is primarily due to the planned December 2023 exit of the MSA by MEDLINE.

Liam Kelly: That completes my comments on the second quarter revenue performance.

Liam Kelly: Turning now to some commercial and clinical updates. Starting with the intra-aortic balloon pump and catheter market, we are currently experiencing increased quote activity following a May 8 letter from the FDA to healthcare providers regarding pump safety and quality in relation to our primary competitor in the intra-aortic balloon pump market. Interaortic balloon pump therapy is used to treat severely ill patients in cardiogenic shock, which is an acute condition where the heart can pump enough blood to meet the needs of the body. The global intra-aortic balloon pump and catheter market is approximately 250 million dollars a year, with growth in the low single digit range and consists of balloon pumps which are primarily replacement sales and single use balloon catheters used to treat patients.

Speaker Change: That completes my comments on the second quarter revenue performance.

Speaker Change: Turning now to some commercial and clinical updates.

Speaker Change: Starting with the inter-arctic balloon pump and catheter market.

Speaker Change: We are currently experiencing increased quote activity following a May 8th letter from the FDA to healthcare providers regarding pump safety and quality in relation to our primary competitor in the intraortic balloon pump market.

Speaker Change: Intraortic balloon pump therapy is used to treat severely ill patients in cardiogenic shock, which is an acute condition where the heart can't pump enough blood to meet the needs of the body.

Liam J. Kelly: The global inter-arctic balloon pump and catheter market is approximately $250 million a year with growth in the low single-digit range and consists of balloon pumps, which are primarily replacement sails and single-use balloon catheters used to treat patients. The market is a jewel, with Teleflex having approximately a one-third market share. We are in the process of increasing our manufacturing capacity for pumps and catheters to help customers that are seeking an alternative vendor. Specifically, the agency recommended that healthcare facilities transition away from the use of competitive devices and seek alternatives if possible.

Speaker Change: The global intra-Ortic balloon pump and catheter market is approximately 250 million dollars a year with growth in the low single-digit range and consists of balloon pumps which are primarily replacement sails and single-use balloon catheters used to treat patients.

Liam Kelly: The market is a duopoly with Teleflex having approximately a one third market share based on 2023 market data. Asia is just over one third of the market, North America is about one third, and EMEA is slightly less than 30%. We are in the process of increasing our manufacturing capacity for pumps and catheters to help customers that are seeking an alternative vendor. Looking forward, we will carefully modulate our manufacturing capacity in accordance with demand signals. We anticipate that the biggest incremental opportunity for Teleflex will be in the US market due to the language in the FDA letter to healthcare providers.

Speaker Change: The market is a duopoly, with Teleflex having approximately a one-third market share.

Speaker Change: Based on 2023 market data, Asia is just over one-third of the market, North America is about one-third, and EMEA is slightly less than 30%.

Speaker Change: We are in the process of increasing our manufacturing capacity for pumps and catheters to help customers that are seeking an alternative vendor.

Speaker Change: Looking forward, we will carefully modulate our manufacturing capacity in accordance with demand signals.

Speaker Change: We anticipate that the biggest incremental opportunity for Teleflex will be in the U.S. market, due to the language in the FDA letter to healthcare providers.

Liam Kelly: Specifically, the agency recommended that healthcare facilities transition away from the use of competitive devices and seek alternatives, if possible. We also expect continued share gains in Asia based on solid execution from the team over the past couple of years. Finally, we are not currently assuming any meaningful share shift in Europe, given a temporary suspension of their CE mark. Looking into the second half of 2024, we expect incremental pump revenue in the fourth quarter given the capital equipment sales cycle and customer training. Based on what we are currently seeing in quote activity, we anticipate a continuation of incremental inter-art balloon pump and capital revenue through the first half of 2025 at a minimum.

Speaker Change: Specifically, the agency recommended that healthcare facilities transition away from the use of competitive devices and seek alternatives if possible.

Speaker Change: We also expect continued share gains in Asia based on solid execution from the team over the past couple of years.

Liam J. Kelly: Finally, we are not currently assuming any meaningful share shift in Europe given a temporary suspension of their CE mark. Looking into the second half of 2024, we expect incremental pump revenue in the fourth quarter, given the capital equipment sales cycle and customer training. We have now owned Palette Life Sciences for just over nine months, and I am pleased to report that the acquisition is tracking ahead of expectation. First, the integration process continues to progress well, including employee onboarding, training, and IT integration.

Speaker Change: Finally, we are not currently assuming any meaningful share shift in Europe given a temporary suspension of their CE mark.

Speaker Change: Looking into the second half of 2024, we expect incremental pump revenue in the fourth quarter, given the capital equipment sales cycle and customer training.

Speaker Change: Based on what we are currently seeing in cold activity, we anticipate a continuation of incremental inter-organic balloon pump and catheter revenue through the first half of 2025 at a minimum.

Liam Kelly: Tom will cover the financial implications of this opportunity when we discuss updated guidance for 2024.

Speaker Change: Tom will cover the financial implications of this opportunity when we discuss updated guidance for 2024. Now I will move to an update on Palette, our most recent acquisition.

Liam Kelly: Now, I will move to an update on Palette, our most recent acquisition. We have now owned Palette Life Sciences for just over nine months, and I am pleased to report that the acquisition is tracking ahead of expectations. First, the integration process continues to progress well, including employee onboarding, training, and IT integration. Cross-functional products, sales training, and proctoring of the legacy EuroLift sales force on the use of Barragell continued to progress with the first branch of our dual bag reps completed at the end of the second quarter. We remain on track to fully complete the integration of the sales force by the end of 2024.

Speaker Change: We have now owned Palette Life Sciences for just over nine months, and I am pleased to report that the acquisition is tracking ahead of expectations.

Speaker Change: First, the integration process continues to progress well.

Liam J. Kelly: Cross-functional product sales training and proctoring of the legacy Eurolift sales force and the use of Varigel continue to progress, with the first tranche of our jewel bag reps completed at the end of the second quarter. We remain on track to fully complete the integration of Salesforce by the end of 2024. Due to better than expected performance in the first half and no change to our second half expectations, we are increasing our 2024 revenue guidance for Palette to $70-$72 million from $66-$68 million previously.

Speaker Change: including employee onboarding, training and IT integration.

Speaker Change: Cross-functional product sales training and proctoring of the legacy Eurolift sales force and the use of Varigel continue to progress with the first tranche of our jewel bag reps completed at the end of the second quarter.

Speaker Change: We remain on track to fully complete the integration of the sales force by the end of 2024.

Liam Kelly: Second, Barragell continues to gain traction in the US with strong sequential revenue momentum. We are seeing continued penetration of Barragell into the rectal spacing market, and we anticipate an increasing number of urologists and radiation oncologists will utilize the technology over time. Due to better-than-expected performance in the first half and no change to our second-half expectations, we are increasing our 2024 revenue guidance for Palette to $70 to $72 million from $66 to $68 million previously. Our full year 2024 interventional urology total revenue guidance continues to assume approximately seven and a half percent growth.

Speaker Change: Second, Barragel continues to gain traction in the U.S. with strong sequential revenue momentum.

Speaker Change: We are seeing continued penetration of varigel into the rectal spacing market, and we anticipate an increasing number of urologists and radiation oncologists will utilize the technology over time.

Speaker Change: Due to better-than-expected performance in the first half and no change to our second-half expectations, we are increasing our 2024 revenue guidance for Palette to $70 to $72 million from $66 to $68 million previously.

Speaker Change: Our full year 2024 Interventional Urology Total Revenue Guidance continues to assume approximately 7.5% growth.

Liam Kelly: Finally, I will provide a new product update. In our interventional access business, we recently received FDA clearance for the Ringer Perfusion Balloon Capital. A limited market release will occur in August, which is on track with our previously communicated second half 2024 timing. As a reminder, Ringer incorporates a unique balloon design that allows blood to flow through a vessel while the balloon is in place. We expect to initially launch with a PTCA indication, but will evaluate opportunities for label expansion following the completion of our vessel preparation trial.

Speaker Change: Finally, I will provide a new product update.

Speaker Change: In our interventional access business, we recently received FDA clearance for the Ringer Perfusion Balloon Catheter.

Liam J. Kelly: A limited market release will occur in August, which is on track with our previously communicated second half 2024 timeline. As a reminder, Ringer incorporates a unique balloon design that allows blood to flow through a vessel while the balloon is inflated.

Tom: We expect to initially launch with a PTCA indication but will evaluate opportunities for label expansion following the completion of our vessel perforation trial. That completes my prepared remarks. Now, I would like to turn the call over to Tom for a more detailed review of our second quarter financial results.

Liam Kelly: That completes my prepared remarks.

Thomas Powell: Now I would like to turn the call over to Tom for a more detailed review of our second quarter financial results. Thanks, Liam, and good morning. Given the previous discussion of the company's revenue performance, I'll begin with margins. For the quarter, adjusted gross margin was 60.8%, a 180 basis point increase versus the prior year period. The year-over-year increase was primarily due to the favorable impact of gross margin from the termination of the MSA and the acquisition of Palette, favorable price, benefits from cost improvement initiatives, partially offset by continued cost inflation. Adjusted operating margin was 26.7% in the second quarter.

Tom: Given the previous discussion of the company's revenue performance, I'll begin with Marjorie. The year-over-year increase was primarily due to the favorable impact of gross margin from the termination of the MSA and the acquisition of POET, favorable price, and benefits from cost improvement initiatives, partially offset by continued cost inflation. Adjusted operating margin was 26.7% in the second quarter. The 10 basis point year-over-year increase was primarily driven by the flow-through of the year-over-year increase in gross markets, partially offset by the inclusion of Palette Life Science operating expenses.

Thomas Powell: The 10 basis point year-over-year increase was primarily driven by the flow-through of the year-over-year increase in gross margin, partially offset by the inclusion of palette like science operating expenses, employee related expenses, and investments to grow the business. Net interest expense told 19.4 million in the second quarter, an increase from 16.6 million in the prior year period. The year-over-year increase in net interest expense reflects higher interest rates versus the prior year period and higher average debt outstanding utilized upon the acquisition of Palette, partly offset by increased interest income. Our adjusted tax rate for the second quarter of 2024 was 12.3%, compared to 10.8% in the prior year period.

Tom: Employee-related Expenses, and Investments to Grow the Business. Net interest expense totaled $19.4 million in the second quarter, versus the prior year period and higher average debt outstanding utilized to fund the acquisition of Palais, partly offset by increased interest in. Our adjusted tax rate for the second quarter of 2024 was 12.3%.

Speaker Change: <unk> related expenses and investments to grow the business.

Speaker Change: Net interest expense totaled $19 4 million in the second quarter.

Speaker Change: An increase from $16 6 million in the prior year period.

Speaker Change: The year over year increase in net interest expense reflects higher interest rates versus the prior year period and higher average debt outstanding utilized to fund the acquisition of <unk>.

Speaker Change: Partly offset by increased interest income.

Speaker Change: Our adjusted tax rate for the second quarter of 2024 was 12, 3%.

Speaker Change: Impaired to 10, 8% in the prior year period.

Thomas Powell: The year-over-year increase in our adjusted tax rate is primarily due to additional costs arising from the enactment of European Pillar 2 tax reform and realization of discrete items in the quarter. At the bottom line, second quarter adjusted earnings for share was $3.42, an increase of 0.3% versus prior year. The year-over-year increase in ETS includes solution in the acquisition of palette like sciences and the related incremental borrowings, determination of the MSA, the negative impact of foreign exchange in a higher tax rate. Turning now to select balance sheet and cash flow highlights, cash flow from operations for the six months was $204.5 million compared to $170.6 million in the prior year period.

Tom: The year-over-year increase in our adjusted tax rate is primarily due to additional costs arising from the enactment of European Pillar 2 tax reform and the realization of discrete items in the Quarter. At the bottom line, second quarter adjusted earnings per share was $3.42, an increase of 0.3% versus the prior year. Cash flow from operations for the six months was $204.5 million, compared to $170.6 million in the prior year period. The increase in net cash provided by operating activities was partially offset by higher tax payments.

Thomas Powell: The $33.9 million increase was primarily attributable to favorable operating results and a decrease in cash outflows from inventory as we moderate our inventory levels due to improving supply change dynamics. The increase in net cash provided by operating activities was partially offset by higher tax payments. Moving to the balance sheet, at the end of the second quarter, our cash balance was $238.6 million as compared to $222.8 million as of year-end 2023.

Tom: Moving to the balance sheet, at the end of the second quarter, our cash balance was $238.6 million as compared to $222.8 million as of year-end 2023. The increase in cash on hand is primarily due to operating cash flows, partly offset by CapEx and debt payments. Net leverage at quarter end was approximately 1.6 times.

Thomas Powell: The increase in cash on hand is primarily due to operating cash flows, partly offset by capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital capital and now for an update on our capital allocation strategy.

Tom: And now for an update on our capital allocation strategy. Over the years, we have continuously assessed our capital allocation. Over the years, our capital allocation strategy has been targeted at thoughtful allocation of capital, high return opportunities, including M&A, strong stewardship of our balance sheet, and consistent payment of the dividend. Today, the share repurchase authorization and ensuing intended initiation of the ASR allow Teleflex to augment its return of capital to shareholders. Pro forma of the $200 million accelerated share repurchase, our Q2 leverage is approximately 1.9 times, which provides a meaningful available capacity for M&A while maintaining a conservative debt profile.

Thomas Powell: In conjunction with our second quarter of the release, we announced today that our Board of Directors has authorized a share repurchase program for up to $500 million of our common stock. Under the authorization, we will commence an accelerated share repurchase program for $200 million between 10 to execute on August 2nd. Over the years, we have continuously assessed our capital allocation and routinely discussed a share repurchase in the past. While investing in the business remains our foremost priority, our business continues to evolve. Today, Teleflex has a broad portfolio of medically necessary products that are tied to critical care procedures.

Speaker Change: We're up to $500 million.

Speaker Change: Our common stock.

Speaker Change: Under the authorization, we will commenced an accelerated share repurchase program for $200 million.

Speaker Change: Which we intend to execute on August 2nd.

Speaker Change: Over the years, we have continuously assess our capital allocation.

Speaker Change: And routinely discussed share repurchase in the past.

Speaker Change: While investing in the business remains our foremost priority our business continues to evolve.

Speaker Change: Today Teleflex has a broad portfolio of medically necessary products that are tied to critical care procedures.

Thomas Powell: We are investing in growth drivers, launching new products to repress our portfolio offering and expand our geographic reach. We believe that now is an appropriate time to add another dimension to our discipline capital allocation process. Our capital allocation strategy is reflective of the strong free cash flow profile over many years in our confidence going forward. Over the years, our capital allocation strategy has been targeted to thoughtful allocation of capital to high return opportunities, including M&A, strong stewardship of our balance sheet, and consistent payment of the dividend. Today, the share repurchase authorization and ensuing intended initiation of the ASR allows Teleflex to augment our return of capital to shareholders.

Speaker Change: We are investing in growth drivers launching new products to refresh our portfolio offering and expand our geographic reach.

Speaker Change: We believe that now is an appropriate time to add another dimension to our disciplined capital allocation process.

Thomas Powell: Importantly, we continue to see opportunities for M&A in the areas of focus that we have articulated previously, and this authorization should be viewed as complementary to our core capital allocation strategy and allows us to leverage our strong balance sheet and cash flow opportunistically to drive shareholder return. Proform of the $200 million accelerated share repurchase; our Q2 leverage is approximately 1.9 times, which provides a meaningful available capacity for M&A while maintaining a conservative debt profile.

Thomas Powell: Turning to our updated financial guidance for 2024, we are increasing 2024 adjusted constant currency revenue growth to 4.25% to 5.25% from 3.75% to 4.75% previously, which excludes the impact of the Italian measure from prior years. The increase in revenue guidance is driven by better-than-expected growth in the first half and incremental entry order balloon pump revenues in the fourth order. In addition, I will remind investors that our year-over-year comparability is impacted by the loss of the $75.7 million in M&A revenues, partly offset by the incremental revenues from Poulet. We are focused on executing on the balloon pump opportunity, but it is evolving in real time.

Tom: Turning to our updated financial guidance for 2024, we are increasing 2024 adjusted constant currency revenue growth from 4.25 percent to 5.25 percent, from 3.75% to 4.75% previously.

Tom: The increase in revenue guidance is driven by better-than-expected growth in the first half and incremental intraaortic balloon pump revenues in the fourth quarter. We are focused on executing on the balloon pump opportunity, but it is evolving in real time. At this point, we are expecting incremental IAB revenue in the fourth quarter, which is contemplated in our updated 2024 revenue guidance. Looking into 2025, we expect incremental IABP and catheter revenue. We will provide an update as we get more clarity on this dynamic situation.

Thomas Powell: At this point, we are expecting incremental IAD revenue in the fourth quarter, which is Williams. Looking into 2025, we expect incremental IAVP and capital revenue, but the magnitude and duration will depend on how demand develops over the coming borders. We will provide an update as we get more clarity on this dynamic situation. At this time, we are currently assuming that the balloon pump opportunity will continue at least into the first half of 2025. During the foreign exchange, we continue to assume a negative impact from foreign exchange to approximately $12 million, representing a 40 basis point head lift, the gap growth in 2024.

Tom: At this time, we are currently assuming that the balloon pump opportunity will continue at least into the first half of 2025. Turning to foreign exchange, we continue to assume a negative impact from foreign exchange of approximately $12 billion, representing a 40-basis-point headwind.

Speaker Change: To me that the balloon pump opportunity will continue at least into the first half of 2025.

Speaker Change: Turning to foreign exchange, we continue to assume a negative impact from foreign exchange of approximately $12 million.

Speaker Change: Representing a 40 basis point headwind.

Speaker Change: GAAP growth in 2024.

Thomas Powell: The guidance assumes approximately a $1.7% average-euro exchange rate for 2024. On a gap basis, which includes the impact of foreign currency and the $13.8 million for the Italian measure, we expect reported revenue growth at 3.4% to 4.4% in 2024, implying a dollar range of 3.76 billion to 3.105 billion. Excluding the impact of the Italian measure, we expect reported revenue growth of 3.85% to 4.85% in 2024 for a dollar range of 3.89 billion to 3.119 billion. This revenue range, which excludes the Italian measure, anchors are 2024 guidance. For your modeling purposes, the 2024 outlook includes an assumption for $765 to $770 million in revenue for the third quarter, representing growth in the range of 3.1% to 3.7% year-over-year, excluding an FX headwind, slightly in excess of $4 million.

Speaker Change: The guidance assumes approximately $1.07 average euro exchange rate for 2024.

Tom: On a gap basis, which includes the impact of foreign currency and the $13.8 million for the Italian measure, we expect reported revenue growth of 3.4% to 4.4% in 2024. Excluding the impact of the Italian measure, we expect reported revenue growth of 3.85 percent. 4.85% in 2024 for a dollar range of $3.89 billion. For your modeling purposes, the 2024 outlook includes an assumption of $765 to $770 million in revenue for the third quarter, representing growth in the range of 3.1% to 3.7% year-over-year, excluding an FX headwind slightly in excess of $4 million. We are raising our 2024 gross margin guidance by 25 basis points at the low and high ends to a range of 60.25% to 61%. The capital component of pumps is slightly dilutive to our corporate gross margin.

Speaker Change: On a GAAP basis, which includes the impact of foreign currency.

Speaker Change: And the $13 8 million for the Italian measure, we expect reported revenue growth of three 4% to four 4% in 2024.

Speaker Change: Implying a dollar range of $3 76 billion to $3 105 billion.

Speaker Change: Excluding the impact of the Italian measure, we expect reported revenue growth of 385% to 485% in 2024 for a $1 range of $3 89 billion to.

Speaker Change: To 311 9 billion.

Thomas Powell: We are raising our 2024 gross margin guidance by 25 basis points at the low and high end to a 61%. The increased reflects the strong operating performance in the first half of 2024, inter expectation for accelerated capital equipment sales in the fourth quarter from intra-alertic balloon pumps. Capital component of pumps is slightly dilutive to our corporate gross margin. However, we expect the margin profile to improve in the future with the accelerated sale of disposable or catheters that carry a more favorable margin profile. We are also raising our operating margin guidance by 25 basis points at the low and high end to a range of 26.5% to 27% for 2024.

Tom: However, we expect the margin profile to improve in the future with the accelerated sale of disposables or catheters that carry a more favorable margin profile. We are also raising our operating margin guidance by 25 basis points at the low and high ends to a range of 26.5% to 27% for 2024. Our guidance reflects the flow through the gross margin and the positive impact of restructuring, offset by the inclusion of the operating expenses for Palette Life Sciences and investments to grow the business. Moving to items below the line.

Thomas Powell: Our guidance reflects the flow through a gross margin and the positive impact of restructuring, offset by the inclusion of the operating expenses for collect life sciences and investments to grow the business. Moving to items below the line, net interest expense is now expected to approximate $81 million for 2024, which assumes the incremental borrowings for today's announcement of a $200 million ASR. The majority of the year-over-year increase in our net interest spend outlook reflects the impact of borrowings associated with a light acquisition, higher interest rates, partially offset by planned debt repayments during 2024. We continue to expect our tax rate to be approximately 12% for 2024, which reflects the impact of the pillar to global minimum tax.

Tom: Net interest expense is now expected to approximate $81 million for 2024, which assumes incremental borrowings for today's announcement of a $200 million ASR. The majority of the year-over-year increase in our net interest-to-spend outlook reflects the impact of borrowings associated with the Collette acquisition, higher interest rates, partially offset by planned debt repayments during 2024. We continue to expect our tax rate to be approximately 12% for 2024, which reflects the impact of the Pillar 2 Global Minimum Tax. Turning Journey

Thomas Powell: Turning journeys, we are raising the low end of guidance by 20 cents and raising the high end of guidance by 25 cents, which reflects the previously discussed IADP opportunity in addition to our first half performance. In turn, we now expect 2024 adjusted earnings for share to be in a range of $13.80 to $14.20. Our 2024 adjusted EPS outlook continues to reflect 87 cents in year-over-year headwinds. After adjusting for these headwinds, year-over-year underlying adjusted currency EPS growth is approximately 9% on the low end of guidance and 11% on the high end of guidance.

Tom: We are raising the low end of guidance by $0.20 and raising the high end of guidance by $0.25, which reflects the previously discussed IABP opportunity in addition to our first half performance. After adjusting for these headwinds, year-over-year underlying adjusted constant currency EPS growth is approximately 9% on the low end of guidance and 11% on the high end of guidance. That concludes my prepared remarks. I would now like to turn it back to Liam for closing comments.

Thomas Powell: That concludes my fair remarks.

Speaker Change: That concludes my prepared remarks, I would now like to turn it back to Liam for closing commentary.

Liam Kelly: I would now like to turn it back to Liam for closing comments here. Thanks, Tom.

Liam J. Kelly: Thanks, Tom. In closing, I will highlight our three key takeaways from the second quarter of 2020. First, our diversified portfolio and global footprint drove durable growth in the second quarter. Additionally, our execution remained strong.

Liam Kelly: Thanks, Tom.

Liam Kelly: In closing, I will highlight our three key takeaways from the second quarter of 2024. First, our diversified portfolio and global footprint drove durable growth in the second quarter. Our execution remains strong. We are launching new products, and our margins remain healthy.

Liam Kelly: In closing I will highlight our three key takeaways from the second quarter of 2024.

Liam Kelly: Our diversified portfolio and global footprint drove durable growth in the second quarter, our execution remains strong we.

Liam J. Kelly: We are launching new products, and our margins remain healthy. Second, the solid performance in the first half of the year and the expected contribution from the inter-arctic balloon pumps in the fourth quarter gives us confidence to increase our revenue and earnings per share guidance for 2020. Paulette is performing above our expectations.

Speaker Change: We are launching new products and our margins remain healthy.

Liam Kelly: Second, the status performance in the first half of the year and the expected contribution from the interarctic balloon pumps in the fourth quarter gives us confidence to increase our revenue and earnings for share guidance for 2024. Third, we will continue to focus on our strategy to drive durable growth. Pallet is performing above our expectations. We are executing on the interarctic balloon pump and catheter opportunity, and Titan is generating solid growth. We will invest in organic growth opportunities and drive innovation and expand our margins.

Speaker Change: Second the solid performance in the first half of the year and the expected contribution from the intra aortic balloon pumps in the fourth quarter gives us confidence to increase our revenue and earnings per share guidance for 2024.

Speaker Change: Third we will continue to focus on our strategy to drive durable growth <unk> is performing.

Speaker Change: Farming above our expectations, we are executing on the inter Arctic balloon pump and catheter opportunity and Titan is generating solid growth.

Liam J. Kelly: We are executing on the inter-Arctic balloon pump and catheter opportunity, and Titan is generating solid growth. We will invest in organic growth opportunities, drive innovation, and expand our market. That concludes my prepared remarks.

Speaker Change: We will invest in organic growth opportunities and drive innovation and expand our margins.

Liam Kelly: Finally, we will execute in our discipline's capital allocation strategy, which now includes a share repurchase program to return cash to shareholders and enhance long-term value creation.

Speaker Change: Finally, we will execute on our disciplined capital allocation strategy, which now includes a share repurchase program to return cash to shareholders and enhance long term value creation.

Liam Kelly: That concludes my prepared remarks.

Operator: Now, I would like to turn the call back to the operator for Q&A. Thank you, and if you would like to ask a question, please press star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Operator: Now, I would like to turn the call back to the operator for Q&A. Thank you. And if you would like to ask a question, please press star one on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Operator: We ask that you limit yourself to one question and one follow-up. If you would like to ask additional questions, we invite you to add yourself to the queue by pressing star 1 again. Thank you, and congratulations on a great quarter here. Maybe start a little bit with Intra-Aortic Balloon Pumps. There's a lot of noise out there, Liam.

Operator: We ask that you limit yourself to one question and one follow-up. If you'd like to ask additional questions, we invite you to add yourself into the queue by pressing star one again.

Anthony Patron: And our first question comes from the line of Anthony Patron with Mizzouho Group. Your line is open. Thank you, and congratulations on a great quarter here. Maybe start a little bit with intray or balloon pumps. A lot of noise out there. You mention a May notice on the competitor. Maybe just what you're hearing on the ground. It seems like when you look at the results from the competitor there was not much movement in the second quarter. Your outlook is calling for you know some market shift perhaps starting in the second half of this year extending into 2025.

Anthony Charles Petrone: From the competitor, there was not much movement in the second quarter. Your outlook is calling for, you know, some market shift, perhaps starting in the second half of this year, extending into 2025. 12 to 18 months, and then I'll have a follow-up.

Anthony Patron: But maybe just you know what you're hearing on the ground as relates to entry or bloom pumps, and if you can maybe to just size with that opportunity looks like over the next 12 to 18 months, and then I'll have a follow.

Liam Kelly: Yeah, Anthony, so first of all. We're really delighted to be able to call up our total revenue guidance for the year by 50 basis points, and a significant contributor to that is the inter-artic balloon pump opportunity, which we expect to hit in the fourth quarter. With regard to the inter-artic balloon pumps and catheter specifically, over the past two and a half years, Anthony, we've had a really strong market position and we've been continuing to take share up until this point. The opportunity is evolving real time and based on what we know today in the visibility we have, we do expect the vast majority of those pumps that will ship in Q4, just on the timing, Anthony, within the marketplace as it takes for people to get them through their system and to place the orders.

Liam J. Kelly: Yeah Anthony, so first of all, we're really delighted to be able to call up our total revenue guidance for the year by 50 basis points, and a significant contributor to that is the inter-arctic balloon pump opportunity which we expect to hit in the fourth quarter. With regard to inter-arctic balloon pumps and catheters specifically, over the past two and a half years, Anthony, we have had a really strong market position, and we've been continuing to take share up until this point.

Liam J. Kelly: The opportunity is evolving real time, and based on what we know today and the visibility we have, we do expect the vast majority of those pumps that will ship in Q4 just at the time Anthony within the marketplaces it takes for people to get them through their system and to place the orders. I will tell you that our quote rate has been very, very robust since the announcement from the competitor and is encouraging enough for us to realize this is going to impact us at least into the first half of 2025, and you have a variety of reactions on the ground from the customers. The bulk of the inbounds have come from North America, the U.S. specifically not from North America, and not too much from Europe because the CE mark right now has only been suspended for a shorter period of time.

Liam Kelly: I will tell you that our call rate has been very, very robust since the announcement from the competitor and is encouraging enough for us to realize this is going to impact at least into the first half of 2025, and you have a variety of reactions on the ground from the customers. The bulk of the inbound have come from North America, the US specifically, not North America, not too much from Europe because the sea mark right now has only been suspended for a shorter period of time. We were always taking share in Asia Pacific, and we expect that to continue over the multi-year period.

Liam J. Kelly: We have always taken a share in Asia-Pacific, and we expect that to continue over a multi-year period. Our goal is to ensure that over the longer term it's not just about pumps, that the catheters that follow those pumps will be with us for a multi-year period, and our second goal is to ensure that the share that we take we maintain that over the long term, so we become a more meaningful player in the inter-arctic balloon pump and catheter market. Thanks, Anthony. I'm going to cover the second question first, Anthony, because I think it's an important one.

Liam Kelly: Our goal is to ensure that over the longer term it's not just about pumps; that the catheters that follow those pumps will be with us for over a multi-year period. Our second goal is to ensure that the share that we take we maintain that over the long term, so we become a more meaningful player in the intra-aortic balloon pump and catheter market.

Anthony Patron: Well, that that's helpful. Quick follow-up there would just be when we think about share gains in that category, just a margin profile of that incremental share gain. How much of a margin tailwind do you expect from from pumps.

Liam Kelly: And then just a quick one, just a quick question on capital allocation, share buyback here. Maybe just a recap on the tuck-in M&A strategy relative to buyback. Is this signaling a shift away from the tuck and strategy more toward buyback and how do you balance between those two priorities? Thanks again, congratulations. Thanks, Anthony. I'm going to cover the second question first, Anthony, because I think it's an important one. As both Tom and I said in our prepared remarks, this is in addition to our ongoing M&A strategy. Right now, as we look at our company, our free cash flow generation is really, really strong.

Liam J. Kelly: And as both Tom and I said in our prepared remarks, this is in addition to our ongoing M&A strategy. Right now, as we look at our company, our free cash flow generation is really, really strong. Our current leverage is 1.6 times, and with the 200 million of the ASR, that takes us to 1.9 times, a really healthy position.

Liam Kelly: Our current leverage is 1.6 times, with the 200 million of the ASR that takes us to 1.9 times a really healthy position, and we continue to be active out there in the M&A market looking for opportunities. I want to reassure every investor listening to this call that this does not cause us to miss a heartbeat in our M&A strategy. And also continuing to invest in the business to improve shareholder return. On the first questions you asked about the margin profile, Anthony, I would say. That you should look at it in two buckets, really. The first bucket is the pump volume that's going to hit us in particular beginning in Q4s, I already said.

Liam J. Kelly: And we continue to be active out there in the M&A market looking for opportunities. I want to reassure every investor listening to this call that this does not cause us to miss a beat in our M&A strategy and also continue to invest in the business to improve shareholder return. On the first question you asked about the margin profile, Anthony, I would say that you should look at it in two buckets really.

Speaker Change: And also continuing to invest in the business to improve shareholder return.

Speaker Change: The first question you asked about the margin profile Anthony.

Speaker Change: I would say.

Liam J. Kelly: The first bucket is the pump volume that's going to hit us in particular beginning in Q4, as I already said. That is dilutive to our corporate average. The catheters that will follow are accretive to our gross margin average. So, in its entirety, that business is equal to our corporate average, but it comes in two stages. You'll get the pumps first, and then over the next multi-year period, you will get the catheters that are accretive. So that's how you should model it.

Speaker Change: That you should look at it in two buckets really the first bucket is the pump.

Speaker Change: Volume Thats going to hit Us in particular, beginning in Q4 as I already said that is dilutive to our corporate average the catheters that will follow are accretive to our gross margin average so in its entirety that business is equal to our corporate average, but it comes in two stages, you'll get the pumps forest and then over the next months.

Liam Kelly: That is delusive to our corporate average. The catheters that will follow are crazy to our gross marriage and average. So, in its entirety, that business is equal to our corporate average, but it comes in two stages. You'll get the pumps for us. And then, over the next multi-year period, you will get the catheters that are crazy. So that's how you should model it. And I just want to make an additional point on that. Even despite the pump volume coming in Q4, we have still been able to update our gross marriage and guidance with an uplift of 25 basis points coming from the core business.

Speaker Change: The year period, you will get the catheters that are accretive. So that's how you should model it and I just wanted to make an additional point on that even despite the pump volume coming in Q4, we have still been able to update our gross margin guidance with an uplift of 25 basis points coming from the core business so that should.

Liam J. Kelly: And I just want to make an additional point on that. Even despite the pump volume coming in Q4, we have still been able to update our gross margin guidance with an uplift of 25 basis points coming from the core business. So that should really send a strong signal to our investment community that our core business is performing exceptionally well, driving the 25 basis points in gross margin and driving 25 basis points in the operating margin and, obviously, the EPS that Tom outlined in his comments.

Liam Kelly: So that should really send a strong signal to our investment community that our core business is performing exceptionally well, driving the 25 basis points in gross marriage and driving 25 basis points. And the operating margin and obviously the EPS that I'm outlined in these comments.

Matthew O'brien: And your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open. Morning. Thanks for taking the questions. Just to follow up on Anthony's on IABPs. Liam, is it fair to think, you know, the guidance ratio of the years about 15 million, maybe 10 of that is IABPs specifically. And then that's only for the US. And as I look at that market, I think the opportunity for you guys is something like 60 million that you don't already have here in the state. So you're thinking you're going to get about, you know, one sixth of that opportunity here in Q4 and then more of it in the next year.

Liam J. Kelly: And your next question comes from Matthew O'Brien with Piper Sandler. Your line is open, and it's evolving in real time. You have to remember, this just happened on May 8. Our quote, inbound volume didn't really start to increase until you got well into the back end of June. And here we are sitting on the first day of August.

Liam Kelly: So is that the right way to think about the opportunity, and I guess why wouldn't Europe be an opportunity with that C mark being suspended. Thanks. Yeah, thank you. I think that the way I would look at this mass is that it's evolving in real time. You have to remember this just happened on May 8. Our quotes inbound volume didn't really start to increase until you got well into the back end of June. And here we are sitting in the first day of August. So that'll tell you I'm trying to give you a timeline. The way I would look at the call up is that the majority of it is associated with the inter-artic balloon pumps.

Matthew Charles Taylor: So that'll tell you, I'm just trying to give you a timeline. The way I would look at the call is that the majority of it is associated with the intra-arctic balloon pumps. The catheters will come later. I would agree with your assessment that there is further opportunity to develop and take more market share, at a minimum, in the first half of 2025. Regarding your question on Europe, the short term, and we've had short-term suspensions in the past with the competitor where they were out of the market. If you go back to 2023, they were out for six months. And there's very little volume that switches in a short period of time, Matt.

Liam Kelly: The catheters will come later. I would agree with your assessment that there is further opportunity to develop and take more market share, at a minimum, in the first half of 2025.

Liam Kelly: Regarding your question on Europe, the short term, and we've had short term suspensions in the past with a competitor where they've been out of the market. If you go back to 2023, they were out for six months. And there's very little volume to switches in a short period of time. That's why we're tempering our expectations for what's going to happen in Europe. Unless the withholding of the CE mark is extended beyond that time. And then, as I said, in an evolving situation that would change. I would also point out that we've begun scaling up and continued to scale up our manufacturing to make sure we can match the demand.

Liam Kelly: As I sit here today, I feel really comfortable that we are able to match any demand that comes from this opportunity just because of the nature of the manufacturing process for both the pumps and the catheters.

Jason Bedford: And your next question comes from the line of Jason Bedford with Raymond James; your line is open. Good morning, thanks for taking the questions. I hate to continue on this balloon pump trend here, but just quickly, the $250 million market you talked about, is there any way to break out capital versus one time use disposal? So I would say that if you wanted to break out the 250, the easiest way to look at it, Jason, is about half and half. Half of it comes from the capital on an annual basis, because you just remember the pumps will last for about eight years, and the catheters get used over that cycle.

Liam J. Kelly: That's why we're tempering our expectations for what's going to happen in Europe unless the withholding of the CE mark is extended beyond that time. And then, as I said, in an evolving situation, that would change. I would also point out that we've begun scaling up and will continue to scale up our manufacturing to make sure we can match the demand. As I sit here today, I feel really comfortable that we are able to meet any demand that comes from this opportunity, just because of the nature of the manufacturing process for both the pumps and the catheters. And your next question comes from the line of Jayson Bedford with Raymond James. Your line is open. Good morning.

Jayson Tyler Bedford: Thanks for taking the questions. I hate to... We're going to continue on this balloon pump trend here, but just quickly, the $250 million market you talked about, is there any way to break out capital versus one-time use disposal? So I would say that if you wanted to break out the $250 million, the easiest way to look at it, Jayson, is about half and half. Half of it comes from capital on an annual basis.

Liam J. Kelly: Because just remember, the pumps will last for about eight years, and the catheters get used over that cycle. So that's a reasonable rule of thumb for the $250 million. Thanks, and maybe for Tom, on the guidance EPS, you beat 2Q, you lifted the margin guidance, but of the 20 to 25 cent EPS raise, how much of that is related to the buyback? Well, just as we think about the $0.20 to $0.25 raise, really that's an organic increase.

Liam Kelly: So that's a reasonable rule of thumb for the 250 million.

Thomas Powell: Okay, thanks. And maybe for Tom, on the guidance, EPS, you meet to Q, you lifted the margin guidance, but of the 20 to 25 cent EPS raise, how much of that is related to the buy back? Thanks. Well, just as we think about the 20 to 25 cent raise, really that's an organic increase. It's coming from the performance of the underlying business. As we look at some of the pluses and minuses, we're going to get some incremental IEP revenues, which we assume that's going to offset the impact from the Italy pay back. And then the increase in the interest expense associated with the buy back is being offset by the reduction in share count.

Liam J. Kelly: It's coming from the performance of the underlying business. As we look at some of the pluses and minuses, we're going to get some incremental IEBP revenues, which we assume is going to offset the impact of the Italy payback. And then the increase in the interest expense associated with the buyback is being offset by the reduction in share count. So the buyback itself in 2024 is expected to be EPS neutral as a result of additional interest expense being incurred and that being offset by the reduction in average weighted shares. So again, the $0.20 to $0.25 is really due to the strength of the underlying organic growth. I'll just add, Jayson, that the benefit from the share repurchase will be seen in 2025. Great. Thank you so much.

Thomas Powell: So the buy back itself in 2024 is expected to be EPS neutral as a result of additional interest expense being incurred, and that being offset by the reduction in average way to shares outstanding. So again, the 20 to 25 cents is really due to the strength of the underlying organic business.

Thomas Powell: I'll just add, Jason, that the benefit from the share report just would be seen in 2025.

Shingen Singh: And our next question comes from the line of Shingen Singh with RBC. Your line is open. Great. Thank you so much.

Liam J. Kelly: Liam, I was wondering if you could give us an update on the interventional urology business in a little bit more detail. You know, what was the contribution from M&A this quarter, and what are you seeing on the doctor's office side for Uroloft? Senator Gilligan, on the doctor's office side, I will tell you it continues to be challenged.

Liam Kelly: Liam, I was wondering if you can give us an update on the interventional urology business in a little bit more detail. What was the contribution from M&A this quarter? And what are you seeing on the doctor's office side for your left? Absolutely Shingen. On the doctor's office side, I will tell you it continues to be challenged, very, very similar to Q1. So no little change, no change on the growth profile in the sites of service, and no change in the amount of procedures that are being done in the office versus the hospital. And really no change to the growth profile in the office; it continues to be challenged.

Liam J. Kelly: Very, very similar to Q1, so no little change, no change in the growth profile in the sites of service, and no change in the amount of procedures that are being done in the office versus the hospital, and really no change to the growth profile in the office. It continues to remain challenged. I will tell you that, as we outlined in our prepared remarks, the biggest change has been in Palette, where through the first half of the year, based on the performance of Palette Life Sciences and, in particular, Barragel, we're updating our revenue guidance from $66 to $68 million to $70 to $72 million.

Liam Kelly: I will tell you that, as we outlined in our prepared remarks, the biggest change has been in Palette, where, through the first half of the year, based on the performance of Palette Life Sciences, and in particular, Barigel, we're updating our revenue guidance from 66 to 68 million to 72 million. Your lift has been performing broadly in line, but by definition, we're holding our full year guidance at 7.5% for interventional urology, and we're really pleased with the performance of Palette, really pleased with the performance of Barigel. The cross-training of the sales reps Shogun is now completed of those 50 dual bag reps.

Liam J. Kelly: Urolift has been performing broadly in line, but by definition, we're holding our full-year guidance at 7.5% for interventional urology, and we're really pleased with the performance of Palette and really pleased with the performance of Barragel. The cross-training of the sales reps, Shagun, is now completed for those 50 dual-bagged reps, and as was always the case in our full-year guidance and no change, we still anticipate an improvement in the second half of the year as Palette Life Sciences continues to ramp and we get those dual-bagged sales reps back into the field selling both products.

Liam Kelly: And as was always the case in our full year guidance and no change, we still anticipate an improvement in the second half of the year, as Palette Life Sciences continues to ramp, and we get those sales reps, dual bag sales reps back into the field selling both products.

Thomas Powell: Margaret, and just as a follow-up for Tom, can you help us with the cadence of margins in the back half? Especially, you know, you mentioned IABB, the capital component is going to have an impact. And then where do you stand relative to, you know, your prior LRP, which was at the low end for gross margins and operating margins, 61.5 and 28.75%? Thank you. Well, I would say that, you know, to Liam's point, the margin profile of the incremental revenue from the IABB is slightly dilutive to our overall average. And what we're expecting in the back half of the year is that we're going to see on the gross margin line a fairly, fairly stable gross margin, Q3 and Q4.

Speaker Change: The gasoline component is going to have an impact and then where do you stand relative to you know your prior L. RP, which was at the low end for gross margins and operating margins 61, and a half in 28 when 75%.

Liam J. Kelly: Well, I would say that, to Liam's point, the margin profile of the incremental revenue from the IABP for the catheters will start to see an improving margin profile from that business. And our next question comes from the line of George Sellers with Stevens Inc. Your line is open.

Speaker Change: Well I would say that.

Speaker Change: To liam's point the margin profile of the incremental revenue from the Iab piece is slightly dilutive to our overall average and what we're expecting in the back half of the year is that.

Speaker Change: See on the gross margin line are pretty fairly fairly stable gross margin Q3, and Q4 and on the operating margin line, we will see some some further leverage in the fourth quarter, just given stronger revenues.

Thomas Powell: And on the operating margin line, we'll see some further leverage in the fourth quarter, just given stronger revenues. So, you know, again, as we think about the longer term on the IABB opportunity, in 2025, as we sell more of the catheters, we'll start to see an improving margin profile from that business. Now, I'd say for the LRP, you know, we continue to believe that the targets are appropriate for the company. I would say that the gross margin, you know, there is a pathway to get there. We're going to need to see some strong mix, good performance out of our manufacturing sites and, you know, inflation continuing to improve for us to be able to get there.

Speaker Change: So again as we think about.

Thomas Powell: But they are targets that we're still working towards, and we'll update you as appropriate on that as we get into 2025 guidance.

George Sellers: And our next question comes from the line of George Sellers with Steven's Ink. Your line is open. Good morning, and thanks for taking the question.

George Stone Sellers: Maybe on the Ringer balloon catheter discussion, could you just give us a little more detail on maybe how that augments your existing device portfolio, sort of where that, what that fits, and what your expectations are for maybe share shifts over time and any cannibalization to your existing portfolio of balloon catheters, which is right in the call point for the biggest part of our sales force that sells our complex catheters. It is growing into an approximately $40 million market, and its indication, as I said, is PTCA. Our thinking on this is that there may be additional indications in the peripheral. And as we all know, we've got one heart and two legs.

George Sellers: Maybe on the ringer balloon catheter discussion, can you just give us a little more detail on maybe how that augments your existing device portfolios or where that fits? And what your expectations are for maybe shareships over time and any cannibalization to your existing portfolio balloon catheters? Thanks, George, and good morning to you as well. The ringer has a PTCA indication, which is right in the call point for the biggest part of our sales force that sell our complex catheters. It is growing into an approximately $40 million market, and its indication, as I said, is PTCA.

Liam Kelly: Our thinking on this is that there may be additional indications in the peripheral, and as we all know, we've got one heart and two legs. So the market is much bigger in the peripheral. My expectation is that the surgeons and the interventional cardiologists will tell us where the next application is. When they get this product in their hand, it's a pretty innovative product, and what the product does, in effect, is it helps the interventional cardiologist in the case where there is an accidental puncture of a vessel. And it allows them to continue to do the procedure by using the ringer catheter.

Liam J. Kelly: So the market is much bigger in the peripheral. My expectation is that the surgeons and the interventional cardiologists will tell us where the next application is. When they get this product in their hand, it's a pretty innovative product, and what the product does, in effect, is it helps the interventional cardiologist in the case where there is an accidental puncture of a vessel, and it allows them to continue to do the procedure by using the ringer catheter.

Liam Kelly: There will be no cannibalization, George, to your part of your question with regard to our current portfolio. And we've just completed a study on perforation, which will be the next indication for this product as we continue to grow into that $40 million market. So another example, again, of the innovation within the interventional access business, new products into this business in particular is the lifeblood of the interventional cardiology. You want to be in front of the clinician in the cath lab, and having new products within your bag, it allows that interaction on an ongoing basis. We've seen it with Manta, we've seen it with the Watson wire, now we're going to see it with the Ringer, and we're really happy that this product was in a little bit ahead of its timeline.

Liam J. Kelly: There will be no cannibalization, George, on your part of your question with regard to our current portfolio, and we've just completed a study on perforation, which will be the next indication for this product as we continue to grow into that $40 million market. So another example, again, of the innovation within the interventional access business. New products into this business, in particular, are the lifeblood of interventional cardiology. You want to be in front of the clinician in the cath lab, and having new products within your bag allows that interaction on an ongoing basis. We've seen it with Manta, we've seen it with the Watson wire, now we're going to see it with Ringer, and we're really happy that this product was a little bit ahead of its timeline.

Liam J. Kelly: So we're happy with the execution of the R&D organization within that business unit as well, George. Okay, great. That's really helpful, Culler. I appreciate that. And maybe switching back to the interventional urology segment, I'm just curious if there's any quantifiable impact on that training that you talked about that's now complete. How much of a headwind, if any, was that?

Liam Kelly: So we're happy with the execution of the R&D organization within that business unit as well, George.

George Sellers: Okay, great. That's really helpful color. I appreciate that.

George Sellers: And maybe switching back to the interventional urology segment, I'm just curious if there's any quantifiable impact to that training that you talked about that's now complete. How much of a headwind, if any, was that? How should we think about potential headwinds or sequential tailwinds with training in that segment going forward? Well, I think it's hard to quantify what it's been in the first half of the year, but we had planned for the impact of the cross training. We knew that it was going to have an impact, and therefore we always anticipated that in the back half of the year, interventional urology would be improving as you go towards the back half of the year.

Liam J. Kelly: And how should we think about potential headwinds or sequential tailwinds with training in that segment going forward? Well, I think it's hard to quantify what it has been in the first half of the year, but we had planned for the impact of the cross-training. We knew that it was going to have an impact, and therefore, we always anticipated that in the back half of the year, interventional urology would be improving. In my mind, George.

Liam Kelly: I think the tailwinds will come in two buckets in my mind, George. Now you have more sales reps out there, talking about Barragell. So that's an opportunity. And as you know, we have Barragell and the Palette portfolio ramping in the back half of the year as we go through. And again, I want to reiterate, we're really pleased to call up the four million on Barragell just based on the first half performance. But then the other tailwind, one would expect, is you get these reps that were tied up in training for quarter one and quarter two back out there on the road also, positioning and the Uralift back to their surgeons.

Liam J. Kelly: Now you have more sales reps out there talking about barrage-outs. So that's an opportunity, and as you know, we have barrage-out and the pallette portfolio ramping up in the back half of the year as we go through. And again, I want to reiterate, we're really pleased to call up the $4 million on barrage-out just based on the first half performance. But then the other tailwind one would expect is you get these reps that were tied up in training for quarter one and quarter two back out there on the road also positioning the Eurolift back to their surgeons.

Liam J. Kelly: So we'd expect somewhat of an improvement in that as well, as was always anticipated, George. And we have maintained our guide for interventional urology at seven and a half percent, so I think we're confident in our ability to deliver that. And our next question comes from the line of Larry Biegelsen with WF. Your line is open, we continue to reinvest in the business, and, for sure, we intend to continue to do really good M&A. The other part of your question is hard to answer, Vic.

Liam Kelly: So we'd expect somewhat of an improvement in that, as well as was always anticipated, George. And we have maintained our guide for intervention urology at seven and a half percent. So I think we're confident in our ability to deliver that.

Larry Beigelson: And our next question comes from the line of Larry Beegelson with WF. Your line is open. Hey, good morning.

Speaker Change: Hey, Good morning. This is victor in for Larry Thanks for taking the questions first one M&A has been a major contributor to your revenue growth. Historically can you just talk about what youre seeing on the M&A front I know you're more focused on price to sales or EBIT EBITDA deals and if so what areas and then I had a follow up thank you.

Vikramjeet Chopra: This is Vickin for Larry. Thanks for taking the questions. First one, you know, M&A has been a major contributor to your review growth historically. Can you just talk about what you're seeing on the M&A front and are you more focused on price to sales or EBT with deals and it's from what areas. And then I had to follow up. Thank you. Yeah, Vic, obviously we're active out there. We're always active out there. At any one time, we have a number of facets that we are, we are chasing and paying very close attention to. Our leverage helps us.

Speaker Change: Yes.

Speaker Change: Honestly, we're active out there were always active out there at any one time, we have a number of assets that we are we are chasing and paying very close attention to.

Speaker Change: Our leverage helps us we're at one nine times pro forma even with the $200 million.

Liam Kelly: We're at 1.9 times pro forma, even with the 200 million on the ASR. And I think that, you know, the M&A environment in my mind has improved for private assets. I think valuations; I've seen a tempering in the valuation expectations somewhat. In the areas that we're focused on, you know, it's the worst-kept secrets that we really like the Cat Lab as a call point. We really like emergency medicine. The intensive care unit where our vascular team is every single day is in an area of focus for us. Tokens in OEM and in surgical we could do.

Speaker Change: The ASR and I think that the M&A environment in my mind has improved.

Speaker Change: Private assets I think valuations I've seen a tempering in the evaluation expectations somewhat.

Liam Kelly: I would like to restate that the Sherry Purchase is not a substitute for M&A. We are going to do M&A alongside the Sherry purchase. And we can do both, and we have the cash flow generation to do both. And the Sherry purchase for us is just another way to return capital to our shareholders, where we continue to support our dividend. We continue to reinvest in the business. And for sure, we intend to continue to do really good M&A. The other part of your question is hard to answer, Vic. Are you chasing assets that are delusive or accretive?

Liam J. Kelly: Are you chasing assets that are dilutive or accretive? If you look at the spectrum that we're covering, we are aware that dilution is not a favorable outcome, and we are looking at assets that continue to add value both on the top line and to earnings, and those assets are out there and available. So, we expect it to take two to potentially three months to complete the ASR, and we expect to kick that off pretty quickly here.

Liam Kelly: If you look at the spectrum that we're covering, we are aware that delusion is not a favorable outcome. And we are looking at assets that continue to add value both on the top line and to earnings, and those assets are out there and available.

Vikramjeet Chopra: Great. Thank you.

Thomas Powell: And then just had a follow-up on the ASR. When do you expect that to be completed? I think I heard you say, or maybe I heard Tom say, it's more than, in fact, in 2025. And then does the ASR get you to double-digit growth next year? Thanks for taking the questions. So we expected to take two to potentially three months to complete the ASR. And we expect to kick that off pretty quickly here. So, as far as the growth for next year, we're going to wait until 2025's guidance to talk about that in its entirety.

Speaker Change: And then does the ASR would get you to double digit growth next year. Thanks for taking the questions.

Speaker Change: So we expect it to take two to potentially three months to complete the ASR.

Speaker Change: And we expect to kick that off pretty quickly here.

Liam J. Kelly: So as far as the growth for next year, you know, we're gonna wait until 2025's guidance to talk about that in its entirety. But, you know, just the point that more benefits in 2025. That's really due to just how weighted average shares are calculated, you know, given that it wasn't in our beginning number. As we get into 2025, we'll see more of a share impact than we are seeing in 2024. But again, as Liam pointed out, the benefit to earnings will be in 2025, and we'll discuss that comprehensively on our fourth quarter earnings call as we provide guidance. What gives you confidence you can convert that quote activity into actual conversions or share gains? We'd love to just hear that.

Speaker Change: So as far as the growth for next year, we're going to wait until 2025 guidance to talk about that in its entirety, but.

Thomas Powell: But just the point that more benefit in 2025, that's really due to just how weighted average shares are calculated, just given it wasn't in our beginning number. As we get into 2025, we'll see more of a share impact than we are seeing in 2024. But again, as Liam pointed out, you know, the benefit to earnings will be in 2025, and we'll discuss that comprehensively at our fourth quarter earnings call as we provide guidance for the year.

Speaker Change: Just the point that more benefit in 2025.

Speaker Change: That's really due to just how weighted average shares are calculated just given.

Liam Kelly: It wasn't in our beginning number as we get into 2025, we will see more of a share impact than we are seeing in 2024, but again as Liam pointed out.

Speaker Change: The benefit to earnings will be in 2025, and we'll discuss that comprehensively at our fourth quarter earnings call as we provide guidance for the year.

Rich Newitter: And our next question comes from the route line of Rich Newitter with Truist. Your line is open. Hi, thanks for taking the questions. Sorry, we are juggling a couple of calls. This is answered. I apologize, but just on the pumps to start the IVP opportunity, you talked about strong quote activity. What, what does your confidence you can convert that quote activity into actual, you know, into actual conversions or share gains? I would love to just hear that.

Liam J. Kelly: And then I just want to make sure I understand the margin impact versus the earnings and revenue impact. So IABP share gains are going to be lower margin up front because of the capital piece. Is that right?

Liam Kelly: I just want to make sure I'm understanding on the margin impact versus the earnings and revenue impact. So IVP share gains are going to be lower margin up front because of the capital piece. Is that right? Yeah, Rich, that is correct. The overall business is equal to the company's gross margins. The capital is slightly below, and the catheter is slightly above. So, in its entirety, it's equal. But the call up on gross margins, the 25 basis points is not attributable to the intra-aortic balloon pumps. It's actually despite it to the margins. It's not a big drag because it's just slightly below.

Liam Kelly: But I just want to make sure that people realize that the call up on the gross margins and the up margins are really driven by the core business and the performance of the core business. Regarding your question, which is a good one, is in relation to the ability to convert those quotes. Well, in the past, there were two potential suppliers of product in the marketplace. And our conversion rate was in line with our market share, but it was growing. The overall market is growing at around 3 or 4%. Our intra-aortic balloon pump and catheter business over the last number of years has been growing at more than double that market share growth.

Liam J. Kelly: and the operating margins are really driven by the core business and the performance of the core business. Regarding your question, which is a good one, in relation to the ability to convert those quotes, Well, in the past, there were two potential suppliers of products in the marketplace, and our conversion rate was in line with our market share, but it was growing. The overall market is growing at around 3% or 4%. Our intraortic balloon pump and catheter business has been growing at more than double that market share growth.

Speaker Change: The overall market is growing at around three or 4%, our intra aortic balloon pump and catheter business over the last number of years has been growing at more than double.

Liam Kelly: That market share.

Liam Kelly: So we have been continual to taking share in particular in the US and in Asia Pacific. The quote volume I refer to rich is exclusively in the United States, where customers have been strongly advised by the FDA to seek an alternative supplier. And our confidence level in converting that quote volume associated with the call up in Q4 is incredibly high based on the activity that we're seeing.

Liam J. Kelly: So we have been continuing to take share, in particular in the U.S. and in Asia Pacific. The quote volume I refer to, Rich, is exclusively in the United States, where customers have been strongly advised by the FDA to seek an alternative supplier. And our confidence level in converting that quote volume associated with the call-up in Q4 is incredibly high based on the activity that we're seeing. Okay, thanks.

Speaker Change: Growth. So we have been continue to taking share in particular in the U S and in Asia Pacific The core volume I refer to rich is exclusively in the United States.

Speaker Change: Where customers have been strongly advised by the FDA to seek an alternative supplier and our confidence level in converting that quote volume associated with the call up in Q4 is incredibly high based on the activity that we're seeing.

Speaker Change: Yes.

Thomas Powell: Okay, thanks, and then just on the payback addback, the Italian item that's getting added back to adjusted revenue, you just explain the mechanics of that. You know, while you're adding back a reserve adjustment, I might ask Pom to start over that, Rich. Yeah, sure. So, Rich, in total, in the second quarter, we are taking advantage of additional reserves that total $15.8 million. 13.8 million of that is related to true-up of reserves that are from prior year periods. The remaining $2 million is related to additional reserves related to 2024. So, the addback adds back the prior period impact to the reserve for $13.8 million.

Rich: And then just on the payback, add back the Italian item that's getting added back to adjusted revenue. Can you just explain the mechanics of that, you know, why you're adding back a reserve adjustment? I might ask Tom just to cover that, Rich.

Speaker Change: Okay. Thanks, and then just on the the payback add back the Italian.

Tom: Yeah, sure. So, Rich, in total, in the second quarter, we are taking additional reserves that total $15. The remaining $2 million is related to additional reserves related to 2024.

Tom: So the add back adds back the prior period impact on the reserve, $13.8 million. Captive to the pumpers, is the consumable market open? That's one question.

Liam Kelly: It's being done largely because we don't see this as part of the ongoing operating performance of 2024, and we wanted to be able to provide visibility to how the business is performing, you know, this year. And that's kind of the logic behind it and the mechanics of it. Hopefully, that answers your question. If not, I'm happy to provide more color.

Liam Kelly: Rich, I just want to add ever so slightly to that to what Tom just said, and just to make sure people are aware that in the current year, in Q2, when we, because you realize this didn't happen until July, we rolled up our numbers in Q2. We were above the top end of our guidance range of $7.60 to $7.65. And then we took a booking of $2 million after we closed the quarter in late July. And there's another $2 million of impact in the back half of the year that we're booking because that's in the current year.

Liam Kelly: And I think that should be something that is booked in real time by the company. And as Tom said, the other $13.8 is related to prior year periods and therefore wouldn't be a good representation of the performance of the company.

Speaker Change: It wouldn't be a good representation of the performance of the of the company.

Mike Polark: And our next question comes from the line of Mike Polark. What we'll say your line is open.

Mike <unk>: And our next question comes from the line of Mike <unk> with Wolfe Your line is open.

Mike Polark: Good morning. Thank you for taking the question. Follow up on Bloompumps and then one other. On the Bloompump, is the consumable captive to the pump, or is the consumable market open? That's one question.

Mike <unk>: Good morning. Thank you for taking the question follow up on balloon pumps and then one other on on the balloon.

Speaker Change: Hump.

Speaker Change: Is the consumable.

Mike <unk>: Captive to the to the pumper is the consumable market open. That's one question and then you know given the market's kind of teetering on.

Liam Kelly: And then, you know, given the markets kind of teetering on soul sourcing here with your competitors' challenges, do you expect there to be a price component as you convert these orders relative to history for this market? First of all, on the catheters, the attachment rate to the actual brand of the pump is incredibly high. If you use a competitor pump traditionally, you use the competitor catheter. It's all part of the decision-making process. And if you use the Telephlex pump, you use the Telephlex catheter. Both companies have adapters that work reasonably well, converting catheters; not as good because the catheters work differently.

Liam J. Kelly: And then, you know, given the market's kind of teetering on, soul sourcing here with your competitors' challenges, do you expect there to be a price component as you convert these orders relative to history for this market? First of all, on the catheters, the attachment rate to the actual brand of the pump is incredibly high. If you use a competitor pump, traditionally, you use the competitor catheter.

Speaker Change: Sole sourcing here with your competitors' challenges do you expect there to be a.

Mike <unk>: Price component as you convert these orders relative to history for this market.

Liam J. Kelly: It's all part of the decision-making process. And if you use the Teleflex pump, you use the Teleflex catheter. Both companies have adapters that work reasonably well in converting catheters, although not as well because the catheters work differently. What I mean by that is our fiber optic catheter has a sensor at the tip of the catheter, and that's how it pulses. The competitor catheter has the sensor within the pump, and that's how it syncs. So they don't work as well on fiber optic lasers.

Liam Kelly: And by what I mean by that is our fiber optic catheter has a sensor at the tip of the catheter. And that's how it pulses. The competitor catheter has the sensor within the pump. And that's how it thinks, so they don't work as well on the fiber optic. So therefore the attachment rate for the catheter brand is incredibly high to the brand of pump that the customer uses in relation to price. We are... We're normally joulesourced on many of these IDNs where you'll have hospitals within an IDN; some will use competitor pumps, some will use our pump.

Liam Kelly: So we already have pricing agreements in place. So I'm not anticipating significant pricing increases as we convert the markets.

Thomas Powell: And really, we're trying to look at this long term in relation to converting the market and maintaining a much stronger share position over a 12-month period and maintaining that position and maintaining the catheters over a multi-year period. Hopefully, thank you.

Speaker Change: Over a multiyear period.

Speaker Change: Hopefully and thank you for the follow up I just wanted to understand the reduction in GAAP earnings per share guidance. It looks to be an increase in the restructuring line. So is there anything to call out there of substance. Thank you so much.

Thomas Powell: For the follow-up, I just want to understand the reduction in gap earnings per share guidance. It looks to be an increase in the restructuring line. So is there anything to call out there of substance? Thank you so much. I asked Tom just to go over the gap. If you don't mind, there's nothing really to call out. Yeah. Okay. Business is usual. Mike, thanks for the questions.

Speaker Change: I'll ask Tom just over the gap, if you don't mind Theres, nothing really to call out yeah.

Speaker Change: Yeah Okay.

Speaker Change: Business as usual, Mike Thanks for the questions.

Speaker Change: Yeah.

Craig Bijou: And our next question from the line of cred, the Jew with Bofa. Your line is open. Thanks, guys, for taking the questions. Had a follow-up on the interventional urology and then just a quick follow-up on MNA. So, with Pallette success and the raised guidance there, just wanted to know if, you know, if a growth profile of that business, which I think you were expecting mid 20s growth, maybe at the mid point, does that change? And then I do appreciate that you kept guidance for interventional urology flat or what it was, but you know, with Pallette adding four million more, it would suggest that your lift, you know, goes down by four million or maybe there's potential upside.

Liam J. Kelly: So therefore, the attachment rate for the catheter brand is incredibly high for the brand of pump that the customer uses. [inaudible] And our next question is from the line of Craig Bijou with BOFA. Your line is open. Thanks, guys, for taking the questions. I had a follow-up on interventional urology and then just a quick follow-up on M&A. So, with Palette's success and the raised guidance there, I just wanted to know if the growth profile of that business, which I think you were expecting mid-20s growth, maybe at the midpoint, has changed.

Speaker Change: And our next question is from the line of Craig did you with Bolsa. Your line is open.

Speaker Change: Yeah.

Speaker Change: Thanks, guys for taking the questions I had a follow up on interventional Urology and then just a quick follow up on M&A.

Liam J. Kelly: And then I do appreciate that you've kept guidance for interventional urology flat or what it was, but with Palette adding 4 million more, it would suggest that Urolift. So, Greg here, your math is right. That's a fact.

Liam Kelly: So, I mean, anything maybe with the international side of your lift that you would call out. So great here. Your math is right. That's a fact. But I think pallette is doing better. We're very encouraged by. I think that you're also correct insofar as that the growth rate this year will be greater than we'd originally anticipated. We thought it would be in the 20s. High teens low 20s is what we were expecting. And, you know, as you, if you look at a pro forma last year, we did an excess of 56 million. If you take the mid point, we're going to do 71 million.

Craig William Bijou: But I think Palette doing better is very encouraging. I think that you're also correct insofar as that the growth rate this year will be greater than we'd originally anticipated. We thought it would be in the 20s. High teens, low 20s is what we were expecting.

Liam J. Kelly: And, you know, if you look at it pro forma, last year we did in excess of 56 million. If you take the midpoint, we're going to do 71 million. So there you are at around 25% growth. So very, very encouraging from that aspect. And I think what's important to understand is that we are continuing to convert white space, bringing this product to our existing customer base, and also educating radiation oncologists on the need for spacing, and spacing in its entirety is growing. So that's positive. With regard to interventional urology overseas, I will tell you that the results that we're seeing in Japan for Urolift are incredibly encouraging.

Liam Kelly: So there you are, around 25% growth. So very, very encouraging from that aspect. And I think what's important to understand is that we are continuing to convert the white space. Bringing this product to our existing customer base and also educating radiation oncologists on the need for spacing and spacing in its entirety is growing. So that's the positive. With regard to interventional urology overseas, I will tell you that the results that we're seeing in Japan for your lift are incredibly encouraging. We continue to penetrate that market. And also in Japan, and I talk specifically on Japan because it is the biggest next market internationally.

Speaker Change: So educating radiation oncologists on the need for spacing and spacing in its entirety is growing.

Speaker Change: So that's the positive with regard to interventional urology.

Speaker Change: Overseas.

Speaker Change: I will tell you that the reserve.

Liam J. Kelly: We continue to penetrate that market, and also in Japan, and I talk specifically about Japan because it is the biggest next market internationally. What I would call out is that we would anticipate getting Barigel approved within that market in the first half, probably of 2025. And that would represent a nice opportunity for us to continue to expand Barigel. Also, we are. Got it. And if I could just add on M&A quickly about the share repurchase authorization and the ASR.

Speaker Change: <unk> that we're seeing in Japan for Euro lift are incredibly encouraging we continue to penetrate that Americas and also in Japan and is a nice to talk specifically on Japan, because it is the biggest next market internationally.

Liam Kelly: What I would call out is that we would anticipate getting Barragell approved within that market in the first half probably of 2025. And that would represent a nice opportunity for us to continue to expand Barragell. So also we are... beginning their enrollment of patients for the study for an expanded indication. And we believe that that will expand the market for Barragell by approximately $100 million. The next biggest market overseas with the potential is probably China. And we continue to seed the Chinese market as we continue to trial the product in some of the larger provinces there to get it on the tender system, Craig.

Speaker Change: What I would call out is that we would anticipate getting barrier gel approved within that market.

Speaker Change: In the first half probably a 2025 and that would represent a nice opportunity for us to continue to expand our Barra Joe.

Speaker Change: Also we are big.

Speaker Change: Beginning the enrollment of patients for the study for an expanded indication.

Liam Kelly: Thanks for the question.

Craig Bijou: Kelly, if I could just add on M&A quickly on the share repurchase authorization and the ASR, you know, as a follow-up to, I believe it was Vik's question, maybe just how are you thinking, or does the share repurchase maybe make you more willing to take on some dilution from M&A, because you can potentially offset the actual bottom line impact. Thanks. So, I mean, if you've seen one M&A, you've seen one M&A, Craig, and that's just the fact of life. So at any one time, we're chasing, you know, a handful of assets, and they're all different.

Liam J. Kelly: You know, as a follow-up to, I believe it was Vic's question, maybe just how are you thinking or does the share repurchase maybe make you more willing to take on some dilution from M&A because you can potentially offset the actual bottom line impact? Thanks. So I mean, if you've seen one M&A, you've seen one M&A, Craig, and that's just a fact of life.

Liam J. Kelly: So at any one time, we're chasing, you know, a handful of assets, and they're all different. We view every asset on its merits, and I don't think we would be looking at the share repurchase as an offset. We look at each asset on its own merits

Liam Kelly: We view every asset on its merits, and I don't think we would be looking at the share repurchase as an offset. We look at each asset on its own merits. We look at specific metrics that are about returns, and also we're very acutely focused on accretion delusion on Aeronics per share as we're doing M&A, and that is a factor in the acquisitions. We all know that Palette was delusive, but now look at Palette, call up a four million ad margins that are in excess of Uralif margins and well in excess of the company average. So you can actually see that Palette now, when it does become a creative in 2025, will be a contributor to EPS, and we apologize to shareholders to have to weigh a year for that accretion, but the underlying EPS growth is, Tom Outlines, and he's prepared remarks, has been, is now in that nine to 11 percent.

Liam J. Kelly: We look at specific metrics about returns. And also, we're very acutely focused on accretion dilution on earnings per share, as we're doing M&A. And that is a factor in the acquisitions. We all know that Palette was dilutive.

Liam J. Kelly: But now look at Palette, call up 4 million at margins that are in excess of Eurolift margins and well in excess of the company average. So you can actually see that Palette now, when it does become accretive in 2025, will be a contributor to EPS. And we apologize to shareholders for having to wait a year for that accretion. But the underlying EPS growth, as Tom outlined in his prepared remarks, is now in that 9% to 11% range. So we've got a good line of sight to solid EPS in the marketplace.

Liam Kelly: So we've good line of sites to solid EPS in the marketplace. So again, thanks for the questions, Craig.

Dave Turkaly: And our next question comes from the line of Dave Turkley with Citizens JMP; your line is open. Hey, thanks. Just two quick ones on your second largest geography, EMEA. I think you called out either increased capacity or supply, and then better utilization. I was wondering how and where, if you could comment on that, and then I guess that growth rate you posted a house sustainable, do you think that is? Thank you. Yeah, thanks very much, Dave. I will tell you that EMEA had a really solid quarter, grown at 9.8 percent. Where did it come from?

Liam J. Kelly: And again, thanks for the questions, Craig. And our next question comes from the line of Dave Terkeley with Citizens JMP. Your line is open.

Dave Terkeley: Hey, thanks. Just two quick ones on your second largest geography, EMA. I think you called out either increased capacity or supply and then better utilization. I was wondering how and where you could comment on that.

Speaker Change: I was wondering how and where if you could comment on that and then I guess that growth rate you posted how sustainable do you think that is thank you.

Liam J. Kelly: And then I guess, you know, that growth rate you posted, how sustainable do you think that is? Thank you. Yeah, thanks. Thanks very much, Dave. I will tell you that EMEA had a really solid quarter, growing 9.8%. Where did that come from? We were really strong in Germany, France, and Spain. We were actually very strong in Italy, as well.

Speaker Change: Yes.

Speaker Change: Thanks, very much Dave I will tell you that our EMEA.

Liam J. Kelly: And then we booked the 2 million within the quarter, which took it down to a lower level, into the higher mid-singles, but we'll map that as we go through our guidance for next year. But we're really encouraged by what we're seeing, and those are the geographies Dave that we're seeing it in. Thanks. That's why I asked the question, but yeah, good to hear. Thank you. And I will now turn the call back over to Mr. Lawrence Keusch.

Speaker Change: Really solid quarter growing nine 8% where does it come from we were really strong in Germany, France, and Spain, we are actually very strong in Italy, as well and then we booked the $2 million within the quarter, which took it down to two.

Liam Kelly: We were really strong in Germany, France, and Spain. We were actually very strong in Italy as well, and then we booked the two million within the quarter, which took it down to a lower level. From a product-specific area. We had really strong performance in our emergency medicine, interventional urology, and interventional access. What's very encouraging for me within Europe is that the interventional access meant to continue to penetrate that market, and we were in there a couple of years before we even came to the United States. So, that's quite encouraging within that market. Is it sustainable as the other part of your question?

Speaker Change: Lower level.

Speaker Change: From a.

Speaker Change: Product specific area.

Speaker Change: We had really strong performance in our emergency medicine, interventional urology interventional access what's very encouraging for me within Europe is that the in the intervention access Manta continues to penetrate that market and we were in there are a couple of years before we even came to the United States. So that's.

Liam Kelly: EMEA hasn't grown at these levels forever. And I think we would expect the remainder of this year to be strong, maybe not quite at these levels, but we would expect EMEA to be in the over the longer term in the mid-singles digit growth. And with the way this team is executing, maybe moving up into the higher mid-singles, but we'll map that as we go through our guidance for next year. But really encouraged by what we're seeing. And those are the geographies that we're seeing at it. Thanks, that's why I asked the question, but you had good to hear.

Operator: Thank you.

Lawrence Kircher: And I will now turn the call back over to Mr. Lawrence Kirsch. Thank you, Kayla. And thank you to everyone that joined us on the call today.

Operator: This concludes the Teleflex Incorporated second quarter 2024 Irvings conference call.

Operator: Any may now disconnect your lines.

Operator: Please wait; the conference will begin shortly.

Speaker Change: [music].