Q3 2025 Bioventus Inc Earnings Call
Pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Dave Crawford Vice President Investor Relations. Please go ahead.
Thanks, Megan and good morning, everyone and thanks for joining us. It is my pleasure to welcome you to the <unk> 2025 third quarter earnings Conference call with me. This morning are rock, Cleveland, President and CEO, and Mark Singleton Senior Vice President and CFO.
Robert will begin his remarks with an update on our business and our 2025 priorities and then Mark will review the third quarter results and discuss our 2025 financial guidance, we will finish the call with Q&A.
The presentation for today's call is available on the investors section of our website <unk> Dot com.
Before we begin I would like to remind everyone that our remarks today contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated.
Including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including item one a risk factors of the company's Form 10-K for the year ended December 31 2024.
As such factors may be updated from time to time in the Companys other filings made with the Securities and Exchange Commission.
You are cautioned not to place undue reliance upon any forward looking statements, which speak only as of the date made.
Although the company may voluntarily do so from time to time and undertakes no commitment to update or revise the forward looking statements whether as a result of new information future events or otherwise, except as required by applicable securities laws.
This call will also include references to certain financial measures that are not calculated in accordance with U S generally accepted accounting principles or GAAP.
We generally refer to these as non-GAAP or adjusted financial measures.
<unk> disclosures about in definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance of GAAP are available in the earnings release on the investors section of our website Bioventures Dot com.
Now I will turn the call over to Rob.
Thank you, Dave and good morning, everyone and thanks for joining our call today and has delivered.
Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws.
We had another solid quarter as we continue to make significant progress with our strategic priorities, while helping patients recover so they can live life to the fullest.
This call will also include references to certain Financial measures that are not calculated. In accordance with us, generally accepted accounting principles or gaap.
With strong third quarter results and solid growth expected for the fourth quarter. We are reiterating our full year guidance on all metrics, while continuing to offset $5 million of tariffs and foreign exchange impacts.
Taking a closer look at our third quarter and the three priorities I introduced at the start of the year driving above market revenue growth continuing to continuing to expand our profitability and accelerating free cash flow generation.
We generally refer to these as non-gaap or adjusted Financial measures important disclosures about and definitions. And reconciliations of those non-gaap financial measures to the most comparable measures calculated and presented in a form of Gap. Are available in the earnings release on the investor section of our website bioventus.com. Now I will turn the call over to Rob
First third quarter revenue of $139 million advanced 8% on an organic basis, which represents an acceleration of more than 200 basis points compared to our organic growth for the first half of the year.
Thank you, D. Good morning, everyone. And thanks for joining our call today. I'll just delivered another solid quarter as we continue to make significant progress with our strategic priorities while helping patients recover so they can live life to the fullest
Our team generated above market growth across each business, achieving mid single digit to low double digit organic growth, which reflects the strength and the breadth of our portfolio.
with strong, uh, third quarter results and solid growth expected for the fourth quarter. We are reiterating our full year guidance on all metrics while continuing to offset 5 million dollars of tariffs and foreign exchange impacts.
Let's take a closer look at our third quarter and the 3 priorities, I introduced at the start of the year.
I'll briefly share a few highlights with respect to our progress and momentum.
Driving above Market Revenue growth.
You may recall that we projected that growth and our pain treatments and surgical solutions businesses would accelerate in the third quarter, which is clearly reflected by our results.
Continued to continuing to expand our profitability and accelerating free cash flow generation.
With pain treatments are leading AK therapies continue to outpace market growth as recent account wins gained traction powered by <unk> clinical differentiation the effectiveness of our dedicated commercial team robust private payer coverage and significant opportunities for geographic expansion.
On an organic basis, which represents an acceleration of more than 200 basis points. Compared to our organic growth, for the first half of the year.
Our team generated above market growth across each business, achieving mid single digits to low double digit organic growth, which reflects the strength and the breadth of our portfolio.
And our surgical solutions business delivered another solid quarter with growing momentum in bone graft substitutes as we increase awareness with both existing and prospective customers of our strong clinical and health economic value proposition.
A brief share of a few highlights with respect to our progress and momentum.
You may recall that we projected that growth in our pain treatments and Surgical Solutions businesses would accelerate in the third quarter, which is clearly reflected by our results.
We expect this positive trend to continue into 2026, as we continued to execute our growth strategy.
In addition, restorative therapies organic revenue growth.
Excuse me restorative therapies organic revenue grew double digits again, thanks to the focus.
With pain treatments, our leading ha therapies continued to outpace market growth as recent account, wins gained traction, powered by durolane clinical differentiation, the effectiveness of our dedicated commercial teams robust private payer coverage and significant opportunities for Geographic expansion.
And commercial execution by a great <unk> team.
It's important to note that our performance across a J D GFS and oxygen our three largest products demonstrates the strength of our portfolio, which helps fuel investment for mid and long term growth drivers.
And our Surgical Solutions business delivered, another solid quarter with growing momentum and bone graft substitutes. As we increase awareness with both existing and prospective customers of our strong clinical and health economic value proposition.
Let me provide a little more detail on the exciting developments for two of these growth drivers within our pain treatments business peripheral nerve stimulation or PFS and platelet rich plasma or PRP.
We expect this positive trend to continue into 2026 as we continue to execute our growth strategy.
In addition, restorative therapies organic Revenue growth or excuse me, restorative therapies, organic Revenue, grew double digits again. Thanks to the focus.
Start with DNS.
As a quick reminder, peripheral nerve stimulation helps patients who suffer from chronic peripheral pain and.
And Commercial execution by our great. Excellent team.
And we believe it represents a very attractive growth opportunity for <unk>.
The U S market of approximately $200 million is expected to exceed $500 million by 2029 and grow above 20% annually.
It's important to note that our performance across ha dgs and oxygen are 3 largest products. Demonstrates the strength of our portfolio, which helps fuel investment for our mid and long-term growth drivers.
And we believe that the recent acquisition of <unk> by Boston Scientific clearly validates the potential value of the PFS market and could accelerate awareness and adoption.
Let me provide a little more detail on the exciting developments for 2 of these growth drivers within our pain. Treatments business peripheral nerve stimulation or pns and platelet, rich plasma or PRP.
I'll start with pns.
As you know at the end of the third quarter, We began our limited launch of Stim trial and Talisman. Following the successful FDA five 10-K clearance and we look to expand aggressively.
As a quick reminder, peripheral nerve stimulation helps patients who suffer from chronic peripheral pain.
And we believe it represents a very attractive growth opportunity for bioventus.
Although it's early we're tracking ahead of our expectations on the projected number of stem trial procedures.
And the conversion rate to a permanent <unk> solution.
US market of approximately 200 million dollars is expected to exceed, 500 million dollars by 2029 and grow above 20% annually.
This confirms our hypothesis about the strategic importance of adding a trial lead to our P&L portfolio.
Equally important we are receiving very encouraging feedback from physicians and patients regarding our differentiated technological design, including the power size and ease of use.
And we believe that the recent acquisition of nalu by Boston, Scientific clearly validates the potential value of the pns market and could accelerate awareness and adoption.
It's an exciting time for <unk> to be launching this game changing technology and we're just getting started with expanding our commercial organization educating physicians and increasing our overall presence in this rapidly growing segment.
As, you know, at the end of the third quarter, we began our limited launch of stim trial and Talisman following the successful FDA, 510k clearance. And we look to expand aggressively
Although it's early, we're tracking ahead of our expectations. On the projected number of stim trial procedures and the conversion rate to our permanent Talisman solution.
So while it's early we're looking forward to the significant growth opportunity ahead of us.
And with respect to our new <unk> system XL. We have also received positive customer feedback about this addition to our portfolio as you may recall, the <unk> system reduces procedural time and provide a customizable treatment solution for different patient applications.
This confirms our hypothesis about the Strategic importance of adding a trial lead to our pns portfolio.
Equally important, we are receiving very encouraging feedback from Physicians and patients regarding our differentiated technological design, including the power size.
We recently progressed from our limited launch to training our entire sales team.
And consequently, we expect sales to steadily increase over the remainder of this year and throughout 2026.
It's an exciting time for bioventus to be launching this game-changing, technology, and we're just getting started with expanding our commercial organization. Educating Physicians and increasing our overall presence in this rapidly growing segment.
We believe the combination of Peanuts, and PRP is a significant expansion for <unk> and we will provide at least 200 basis points of profitable growth in 2026.
So, while it's early, we're looking forward to the significant growth opportunity ahead of us.
And shifts our overall portfolio towards markets with higher growth potential.
Longer term, we believe both of these innovative technologies will deliver sustainable growth and become meaningful drivers of significant value for <unk>.
And with respect to our new PRP system Excel we have also received positive customer feedback about this addition to our portfolio. As you may recall, the Excel system. Reduces procedural time and provides a customizable treatment solution for different patient applications.
We recently progressed from our limited launch to training our entire ha sales team.
Turning to our second focus area expanding profitability, our third quarter adjusted EBITDA increased by 13%.
And consequently, we expect sales to steadily increase over the remainder of this year and throughout 2026.
With our adjusted EBITDA margin expanding by over 200 basis points.
This performance further demonstrates the powerful combination of our above market organic revenue growth.
We believe the combination of pns and PRP is a significant expansion for bioventus and will provide at least 200 basis points of profitable growth in 2026.
Here, leading gross margins and operational efficiencies.
And ships. Our overall, portfolio towards markets with higher growth potential.
A combination that enables us to not only drive operating leverage but also simultaneously invest in our future growth.
Longer term. We believe both of these Innovative Technologies will deliver sustainable growth and become meaningful drivers of significant value for bioventus.
We remain on target to achieve our previously communicated 100 basis points of adjusted EBITDA margin expansion for the year.
Turning to our second Focus area expanding profitability.
Our third quarter adjusted ibitta increase by 13%.
And the increased profitability in Q3 combined with our reduced interest expense generated a 200% increase in adjusted earnings per diluted share as we delivered 15 per diluted share in Q3.
Of our above Market organic Revenue growth.
And with respect to our third focus area, we continued to significantly accelerated cash flow as cash from operations in the third quarter nearly tripled versus the same period last year.
Here are leading gross margins and operational efficiencies.
A combination that enables us to not only drive operating leverage, but also simultaneously invest in our future growth.
And we drove our cash conversion ratio of over 100% in the quarter.
For your we remain on target to achieve. Our previously communicated 100 basis points of adjusted even a margin expansion for the year.
Year to date cash from operations is up 88% and we are on pace for our full year cash from operations to nearly double compared to last year.
In conclusion, thanks to our highly engaged team members across the globe. We made significant progress this quarter to deliver on our three priorities and we are prime to close out a strong 2025.
and the increase profitability in Q3 combined with our reduced interest expense generated at 200% increase in adjusted earnings per diluted share as we delivered 15 cents per diluted share in Q3
Our vendors has entered a new phase of our transformation.
And we are well positioned to drive above market profitable revenue growth along with strong consistent cash flow on an annual basis.
and with respect to our third Focus area, we continued to significantly accelerate cash flow as cash from operations in the third quarter, nearly tripled versus the same period last year.
And we drove a cash conversion ratio of over 100% in the quarter.
As we aim to become a $1 billion high growth high margin high cash flow company that creates significant value for our shareholders.
Year to date cash from operations is up 88%. And we are on Pace for a full year, cash from operations to nearly double compared to the last year.
Now I'll turn the call over to Mark.
Thank you Rob and good morning, everyone. Let me begin by saying that I am proud of our team's hard work and dedication to transform bio ventas over the last eight quarters, we have generated at least mid single digit organic revenue growth.
In conclusion, thanks to our highly engaged team members across the globe. We made significant progress, this quarter to deliver on our 3 Pryor and were primed to close out a strong 2025.
I went this has entered a new phase of our transformation.
Significantly improved profitability and strengthened our balance sheet.
But this is just the start of what we can achieve.
And we are, well, positioned to drive above Market profitable Revenue, growth, along with strong consistent, cash flow on an annual basis.
I am confident that with strong focus and disciplined execution, we will continue to advance our business and create significant shareholder value.
As we aim to become a 1 billion high growth, high margin High cash flow company, that creates significant value for our shareholders.
Turning to our headline results for the third quarter revenue of $139 million was unchanged compared to the prior year due to the impact of our advanced rehabilitation divestiture at the end of last year, 8% organic revenue growth was a result of strong performance across all areas of our portfolio adjusts.
Thank you, Rob, and good morning everyone. Let me Begin by saying that I am proud of our team's hard work and dedication to transform bioventus over the last 8 quarters we have generated at least mid single digit organic Revenue growth.
Significantly improved profitability and strengthened our balance sheet.
EBITDA of $27 million was $3 million higher than the prior year and represented an increase of 13%.
Again foreign currency exchange rates had an unfavorable impact for the quarter as we incurred unplanned loss of nearly a half a million dollars.
But this is just the start of what we can achieve. I'm confident that was strong. Focus and disciplined execution, we will continue to advance our business and create significant shareholder value.
For the year, we've now absorbed more than two $5 million in unplanned impacts from FX rate movements.
Attorney to our headline results. For the third quarter revenue of 139 million is unchanged, compared to the prior year, due to the impact of our advanced rehabilitation that messenger at the end of last year,
Adjusted EBITDA margin of 19% expanded 220 basis points compared to the third quarter last year. This was a result of higher gross margin and disciplined spending.
8% organic Revenue. Growth was a result of strong performance across all areas of our portfolio.
Now let me provide some additional commentary on our quarterly revenue and pain treatments revenue accelerated from the first half and advanced 6% in Q3.
Adjusted Eva dog. 27 million was 3 million dollars higher than the prior year and represented an increase of 13%.
As growth in <unk> benefited from strong volume growth of the ruling and recent account wins, which we previously highlighted surgical solutions revenue grew 9% driven by growth in ultrasonics as we broaden the awareness of our value proposition of enhanced precision and control for surgeons reduced patient.
Again, foreign currency exchange rates had an unfavorable impact for the quarter. As we incurred, an unplanned loss of nearly a half, a million dollars for the year. We've now absorbed more than 2 and a half million dollars in unplanned. Impacts from FX rate movements
Blood loss and increased operating room efficiency. In addition, as Rob mentioned, we saw improved growth this quarter in Bgs and expect further acceleration in the fourth quarter.
Adjusted even out margin of 19% expanded, 220 basis points. Compared to the third quarter last year. This was the result of higher gross margin and discipline spending.
Now, let me provide some additional commentary on a quarterly Revenue in pain. Treatments Revenue accelerated from the first half in advance 6% in Q3.
Shifting to restore to therapies revenue declined 29% due to the divestiture of our advanced rehabilitation business.
As growth in ha benefited from strong volume growth of Thoreau, Lane and recent account wins which we've previously highlighted.
Excluding the impact of the divestiture organic growth was 11% as the <unk> team delivered another strong quarter.
Finally revenue from our international segment decreased 4% compared to the prior year, while organic growth climbed 10%.
Our international segment is on target to deliver double digit organic growth in 2025. We believe this positive trend can continue given our new leadership.
Surgical Solutions, Revenue grew, 9% driven, by growth in Ultrasonics. As we broaden, awareness of our value proposition of enhanced precision and control. For surgeons reduced patient, blood loss and increased operating room efficiency. In addition, as Rob mentioned, we saw improved growth this quarter and BTS and expect further acceleration in the fourth quarter.
Market expansion opportunities and enhanced commercial execution.
Shifting to restorative therapies Revenue declined, 29% due to the vesture of our advanced rehabilitation business.
Moving down the income statement adjusted gross margin of 75% was 50 basis points higher than the prior year period as favorable product mix offset the impact of tariffs.
Excluding the impact of the domestic share. Organic growth was 11% as the oxygen team delivered, another strong quarter.
Adjusted total operating expenses and R&D expenses declined by $3 million.
Finally revenue from our International segment decreased 4% compared to the prior year. While organic growth. Climbed 10%.
Increased investment in our growth initiatives was more than offset by direct expense savings related to the divestiture of our advanced rehabilitation business.
Now for the detail on our bottom line financial metrics adjusted operating income increased $3 million compared to the prior year to $24 million adjusted net income of $13 million nearly tripled compared to the prior year period. This growth as a result of our increased gross margin decrease.
our International segment is On Target to deliver double digit organic growth in 2025, we believe this positive trend can continue giving our new leadership
Market expansion opportunities and enhance commercial execution.
Moving down the income statement, adjusted gross margin of 75% was 50 basis points, higher than the prior year period. As favorable product mix offset, the impact of tariffs.
Operating expenses and lower interest expense and finally adjusted earnings of <unk> 15 per share for the quarter, an increase of 10 cents compared to the prior year.
Now shifting to the balance sheet and cash flow statement.
And R&D expenses declined by $3 million. As increased investment in our growth, initiatives was more than offset by direct expense savings related to the domestic of our advantage Rehabilitation business.
System with our planning assumptions, we generated significant cash flow for the second quarter second straight quarter cash flow from operations totaled $30 million, representing an increase of $20 million compared to the prior year.
<unk> cash flow was driven by higher profitability lower interest expense and a significant reduction in one time cash cost.
We ended the quarter with $42 million in cash on hand, and $323 million in outstanding debt, which included $25 million drawn on our revolving credit facility.
Now, for the detail, on our bottom line, Financial metrics, adjusted operating income increased, $3 million compared to the prior year to 24 million adjusted net, income of 13 million, nearly tripled compared to the prior year period. This growth is a result of our increase. Gross margin decreased, operating expenses and lower interest expense, and finally adjusted earnings of 15 cents per share for the quarter and increase of 10 cents compared to the prior year.
During the quarter debt decreased $19 million and we expect to repay the remaining $25 million outstanding under the revolving credit facility by the end of this year.
Now shifting to the balance sheet and cash flow statement, consistent with our planning assumptions. We generated significant cash flow for the second quarter second straight quarter cash flow from operations, total 30 million representing an increase of 20 million compared to the prior year.
As a result of the lower debt outstanding our net leverage ratio declined to below three times at the end of the quarter. We are confident our projected strong cash flow and increase in adjusted EBITDA will drive our year end net leverage below two five times and our debt outstanding to under $300 million.
The stronger cash flow was driven by higher profitability, lower interest expense and a significant reduction in 1-time cash cost.
We believe this reduction our net leverage and that will drive additional interest expense savings and enable greater optionality for capital deployment moving forward.
We ended the quarter with 42 million in cash on hand, and 323 million in outstanding debt, which included 25 million drawn on a revolving credit facility.
Finally, as Rob mentioned, we are pleased to reaffirm our 2025 financial guidance, which we initially provided on March 11th.
During the quarter, debt decreased 19 million and we expect the repay, the remaining 25 million outstanding under the revolving credit Facility by the end of this year.
This includes organic revenue growth of 6% to 8% adjusted EBITDA of $112 million to $116 million and EPS of <unk> 64 to 68.
Our guidance does incorporate the full year impact of $5 million of the current expectation of tariffs in 2025, and the year to date impact related to foreign exchange rates are.
As a result of the lower debt outstanding, our net leverage ratio declined to below 3 times, at the end of the quarter, we are confident our projected strong cash flow and increase in adjusted debe will drive our year-end net. Leverage below 2 and a half times, and our debt outstanding to under $300 million. We believe this reduction in our net leverage and debt will drive additional interest expense savings and enable enable greater optionality for Capital deployment, moving forward.
Our guidance does not assume additional impact from the U S dollar fluctuation in the final quarter of the year.
Finally, as Rob mentioned, we are pleased to reaffirm our 2025 Financial guidance which we initially provided on March 11th.
In closing, we continue to execute our business plan and believe we are well positioned to create shareholder value through.
This includes organic Revenue growth of 6 to 8%.
Through strengthening our growth profitability and cash flow this year and over the long term.
Operator, please open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
We are using a speakerphone please pick up your handset before pressing the keys.
Adjust the da of 112 million to 116 million and EPS of 64 cents to 68 cents. Our guidance does incorporate the full year impact of 5 million of the current expectation of tariffs in 2025 and the year-to-date impact related to foreign exchange rates.
My question has been addressed and he would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our guidance does not assume additional impact from the US dollar fluctuation in the final quarter of the year.
In closing, we continue to execute our business plan and believe we are well positioned to create shareholder value.
Our first question comes from Jason Knickerbocker with Craig Hallum. Please go ahead.
Through strengthening our growth profitability and cash flow this year, and over the long term.
Good morning, Thanks for taking the questions.
Operator. Please open the line for questions.
Rob maybe just to start on paying growth.
Can you just give us an update on kind of market performance in Q3.
And then.
If you could share your drilling growth, specifically I think that'd be helpful.
We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad, if you were using a speaker-phone please pick up your handset before pressing the keys.
Question. There is just sterling kind of driving all of the growth.
What are you seeing out of the more legacy three and five shop businesses, just kind of the puts and takes within pain.
If at any time your question has been addressed and you would like to withdraw your question. Please press star. Then 2 at this time we will possibly to assemble our roster.
Yeah, Thanks, Jason I'll start off and turn it over to Mark for some of the numbers there.
Yes, I think what you saw in the third quarter here is our pain business overall accelerating.
Our first question comes from Jason Knickerbocker with Craig Hallam. Please go ahead.
Backed by.
Hey therapies in Berlin in particular.
Good morning. Uh, thanks for taking the questions, uh, Rob maybe just to start on Payne growth. Um, can you just give us an update on on kind of market performance in Q3?
Feel really good about executing on our growth plan for the back half of the year as we continue to.
To gain additional volume, particularly in large accounts is for the market and the market is going to fluctuate on a correlated yearly basis within the HLA space in.
If you could share derling growth specifically, I think that would be helpful. Um, question. There is just, you know, as darling kind of driving all of the growth. Um, you know, what are you seeing out of the more Legacy 3 and 5 shop? Businesses just kind of the puts and takes within pain.
But it remains a key part of the OA treatment continuum and our focus as you know is there's always going to be to grow our volume above that market growth, regardless of where it's at.
While maintaining a lot of price discipline, so excuse my voice today, but we believe that we're very well positioned to do that to keep growing above the market given our clinical differentiation and private private payer contracts and large dedicated sales team. So.
Feel good about growing the business.
And that market, even if there is some fluctuation and then like I said I will turn it over to mark to get into this some of the details on <unk> and the rest of the portfolio.
Yeah. Thanks for the question and thanks, Rob overall, our growth in the third quarter Darling.
The growth of our portfolio, but that's with a differentiated product that we have there is a strong sales force and contract positioning we have that's what we had expected also as the market moves towards a single injection overall Johnson did have some volume growth, but there's a little bit more price pressure there.
All know about.
For a while and in the market, but overall feel like it was a good quarter and delivered on what we had committed to at our second quarter call.
We're very well positioned to to do that to keep growing above the market, given our clinical differentiation and prior private payer contracts and large dedicated sales teams. So um feel good about uh growing the business um uh, in that market even if there's some fluctuation and and then like I said, I'll turn over to to Mark to to get into some of the details on darling and the rest of the portfolio.
Thanks, and then maybe just on surgical.
Guide implies some acceleration into into Q4, I think in that surgical business can.
Can you just speak to kind of what you're seeing so far in October and if those.
Distributors that.
We have ramped that are going to kind of support that.
Q4 results can you just kind of speak to how productive they have been as they've gotten up to speed.
Yes, Jay its all on I won't get too specific about October, but let me.
Yeah, thanks Chase for the question and, um, thanks Rob. Overall, you know our growth in in the, in third quarter Durling, uh, did you know lead the growth of of our portfolio? But that's, you know, with the differentiated product that we have there in the strong sales, force, and contract, positioning we have, that's what we expect and also, as the market moves towards a single injection, um, overall Gelson, um, you know, did have some volume growth, but there's a little bit more price pressure there. As you know, we've all know about, you know, for for a while and then the market. But overall feel like it was a good quarter and delivered on what we uh had committed to and our and our second quarter call.
<unk>.
Let me know if you have any follow up questions on it so again, sorry about my voice this morning, but.
First what you're referring to there is bone graft substitutes and we mentioned in our previous calls that our back half acceleration for <unk> overall will be driven in part by Bts.
You see that clearly reflected in our Q3 results.
Thanks to our distributor partners and also because we bring a really strong clinical and economic value proposition to that to the $1 billion market that we're targeting and I think what you see in the numbers that we're getting better every day with raising awareness of the total value that we bring to our customers and that is gaining traction with.
Thanks, and then, uh, maybe just on surgical, um, you know, guide implies, uh, some acceleration into into Q4. I think in that surgical business, um, can you, uh, just speak to kind of what you're seeing so far in October. And if those, um, you know, Distributors that, uh, you know, have ramps that are going to kind of support that, that Q4 results. Um, he just kind of speak to how productive they've been, um, as they
Gotten up to speed.
Gotcha, it's all. Um, I won't get too specific about October, but let me uh, reply and let me know if you have any follow-up questions on it. So again, sorry about my voice this morning, but
<unk> and with supply chain leaders so.
Your question, there and we're going to keep stepping up our commercial efforts and we're looking forward to building on our momentum with PGS in the quarters and the years ahead, and we remain very confident about the other part of the surgical business with ultrasonic sensor.
Well into the double digit growth stage. This year to date and we expect that to continue in the next year and beyond and again against that one that's because of our game changing technology, where we continue to believe we have the opportunity to change the standard of care in this space. So for surgical overall remained.
Very positive and that includes for both Bgs amphora ultrasonics.
And just last from me, if we think about what's needed with talisman to make that offering competitive in the market.
What does it take to make that business kind of take off do you need to generate some datasets.
You know, first what you're referring to there is bone graft substitutes and, you know, we mentioned in our previous calls that our back half acceleration for bioventus overall will be driven in part by bgs and you see that clearly reflected in our, our Q3 results. And, you know, that's um, thanks to our distributor partners and also because we bring a really strong clinical and economic value proposition to that to the 1 billion dollar market that we're targeting. And I think what you see in the numbers is that we're getting better every day with raising awareness of the total value that we bring to our customers. And, and that's gaining traction with clinicians and with supply chain leaders. So, you know, for your question there, we're going to keep stepping up our commercial efforts and we're looking forward to, to building on our momentum with bgs and, and the quarters, and the years ahead. And we remain very confident about the other part of of, uh, surgical business with Ultrasonics. It's uh, you know, we're well into the double digit growth, um, stage this year to date and
Is it just kind of commercial execution I mean, maybe just speak to kind of what youre going to do on the clinical data side to kind of prove out that platform.
Yeah. Thanks, Craig well first just for everybody's perspective launch as I mentioned.
Very well.
Launch and we're receiving a lot of positive feedback from customers.
We expect that to continue next year, um, and Beyond and and again for that again, for that 1. That's because of our game changing technology. Uh, where we continue to believe, we have the opportunity to change the standard of care in this space. So, uh, for surgical overall, we remain very positive and, and that includes for both bgs and for Ultrasonics,
About first half and a trial need in our portfolio and also about the.
Power and the size and the ease of use of our Perm technology. So in terms of moving forward. The real key to success is scaling this business commercially keep in mind that.
I would say the business is extremely and team has been extremely small for US we were holding back.
Just last for me, if we think about what's needed, uh, with Talisman to make that offering competitive in the market. Um, you know I guess what does it take to to make that business? Kind of take off, do you need to generate some data sets? Um, you know, is it just kind of commercial execution? I mean, maybe just speak to, to kind of what you're going to do on the clinical data side to to kind of to prove out that platform.
For the launch of both stem trial, and Talisman and now that we have those exciting.
And an exciting technology in our portfolio, we're building up that commercial organization. So that is really the key along with.
Increasing awareness of our technology.
The market and Thats, what youre going to see us doing much more aggressively in the months ahead.
And of course, we will keep you updated on it but overall, we're really looking forward to the path forward with this big growth driver for <unk>.
<unk>.
Sure.
Thanks, Rob.
Yes.
The next question comes from Ross Osborne with Cantor Fitzgerald. Please go ahead.
Yeah, thanks. Well, you know, first, just for everybody's perspective launch, as I mentioned, um, is going very well. Uh, the, the launch and we're receiving a lot of positive feedback, uh, from customers, uh, about first having a trial lead, and our portfolio. Um, and and also about the, uh, the power and the size and the ease of use, uh, of our perm technology. So you know, in terms of moving forward, the real key to success is scaling this business commercially, you know, and keep in mind that you know it's a it's a business is extremely uh and team has been extremely small for us. We were holding back um for the launch of both stem trial and Talisman and now that we have those exciting uh, that exciting technology in our portfolio. We're building up that commercial organization.
Hi, good morning, and congrats on the progress here.
Just starting off with ultrasonics, what levers do you have there to drive penetration within the spine opportunity and how your medical affairs efforts progressing.
Yes, Thanks Ross.
If our ultrasonics I touched on it before there but.
Yes.
I'll reiterate we really have phenomenal technology in this space and it's because our technology.
So that is really the key along with um increasing awareness of our technology um, across the market. And that's what you're going to see us doing, uh, much more aggressively in the months ahead. Um, and and of course, we'll keep you updated on it. But overall, we're, we're really looking forward to the the path forward with uh this big growth driver for my event for bioventus.
Thanks Rob.
You.
It provides control to the physician and it saves time and it delivers many patient benefits and.
The next question comes from, Ross, Osborne with Cantor Fitzgerald, please go ahead.
And so are our greatest lever with this high growth business for us is raising awareness.
About the value that our technology provides and we can do that through a number of different ways through our commercial organization and also as you alluded to through medical Affairs.
Out there to drive penetration within the spine opportunity. And how are your medical Affairs efforts progressing?
Yeah, thanks Ross. Um,
What we're doing is stepping up in a significant way our medical education efforts and that includes bringing on new talent into our organization over the last quarter.
And significantly improving the targeting and the content and the frequency of that medical education again, so that we can help customers understand the value that our technology.
So that's that's the biggest key.
Key to continuing to penetrate that spine space and beyond.
Okay, great. Thanks for clarifying there and then.
But it's, um, you know, we, we I'll, I'll reiterate, we really have phenomenal technology in the space and, and it's because our technology, um, it it, it provides control to the position and it saves time and it delivers, many patient benefits. And, um, and so our, our greatest lever, with this high growth business for us, is Raising awareness, uh, about the value that our technology provides and, you know, we can do that through a number of different ways through our commercial organization and also as you alluded to uh through medical Affairs. And what we're doing is is stepping up.
When thinking about profitability for the company is this a good base level to start thinking about your model. Just curious how you are pairing growth with savings as you're trying to train and develop new markets PRP.
Could you just repeat the questions on where we're comparing growth.
I didn't hear you.
Your balance growth with profitability, especially as you're developing new markets.
Significant way, our medical education efforts and that includes bringing on new Talent into our organization over the last quarter and and significantly improving uh the targeting and the content, and the frequency of that medical education again, so that we can help uh customers understand the value that uh our technology, um brings and that's that's the biggest um uh key to continuing to penetrate uh that's fine. Space and Beyond.
Yeah. Thanks for clarifying Rossiya overall, I mean, we in our guidance committed to expanding our margin by 100 basis points and that's what we're and we're still committed to do for full year 2025.
Okay, great. Thanks for uh, clarifying there and then
And over the medium and long term I mean, that's something that with our peer leading gross margin of 75% we get really good growth that we're capable of and then really it's up to.
1 thing about probability for the company, you know, is this a good base level uh, to start thinking about your model. Uh, just curious how you're pairing, you know, growth with savings as you try and penetrate and develop new markets, such as PRP
When you uh, did you just repeat the questions on Where we're comparing growth?
The opportunity we have to invest in products and also delivering expansion back to investors and so that's been part of what we've done over the last few years, that's part of what we'd look to do over the medium and long term. We look into 2026, that's our intention to do that as well, but we're also going to balance that commitment to expand margin with investments in the <unk>.
I didn't hear you talk about a growth with profitability, um, especially as you're developing new markets.
Opportunities to invest like ultrasonics that we just talked about like PFS that we've talked about but also our international business. So those are exciting investment opportunities for us, but we're also still committed to balance that.
Margin expansion was being smart about investing while we have great opportunity in the market to do so.
Great. Thanks for taking my questions.
Ross.
The next question comes from Caitlin Roberts with Canaccord Genuity. Please go ahead.
Hi, Thanks for taking the questions I guess just to start off on the guidance philosophy, just some color on why you decided to maintain the guidance.
Yeah. Yeah. Thanks for clarifying roster. Yeah. Overall, I mean, you know, we've been our guidance committed to, um, the expanding our margin by 100 basis points and that's what we're we're still committed to do for for full year 2025, um, you know, and over the medium and long term. I mean that's something that you know, with our peers, leading gross margin of 75%, you know, we get this the really good growth that we're capable of and then really it's up to, you know. Uh the opportunity we have to invest in products and also delivering you know, expansion back to investors. And so that's been a part of what we've done over the last few years. That's part of what we look to do over the medium and long term. We look into 2026. Um, that's our intention to do that as well. But we're also going to balance that commitment to expand margin with investments in the great opportunities to invest, like Ultrasonics that we just talked about like pns that we talked about and also our international business. So,
Q4, and then any color into dynamics and expectations going into 2026.
Thanks, Caitlin overall, we set our guidance.
Um those are exciting and uh investment opportunities for us, but we're also still you know, committed to to balance that uh if margin expansion with, you know, being smart about investing. Um while we have great opportunity in the market to do. So
In March early on and we've been consistent with that throughout.
Great, thanks for taking our questions.
Throughout the year and when you look at the midpoint of our guidance it implies a slight acceleration in the fourth quarter from what we've delivered to date and we feel good about that commitment and so that was the decision behind that.
The next question comes from Caitlyn Roberts with canaccord genuity. Please go ahead.
Keeping the guidance the same and feel like that's a good range that we set at the beginning of year is little tighter than we normally would so overall, we still feel good about.
Hi, thanks for taking the questions. You know, I guess just to start off on the guidance floss, the just some color on why you decided to maintain the guidance, um, into the Q4 and then any color into Dynamics and expectations, um, going into 2026.
Our guidance for 2025, when we look into 2026 at this point in time, we're really excited about 2026, we've talked about our growth opportunities in the P&L and ultrasonics in international but we're not going to give guidance for 2026 right now, but we do have some exciting.
No opportunities as we've talked about throughout the call and look forward to sharing our thoughts on 2026 and the March earnings call.
And I'll just add on to that Caitlin I think what youre seeing in the third quarter. Here is just the power of our business. We achieved what we said we'd do grew the business by 8%, we increased margin by 200 basis points generated $30 million in cash and.
We're carrying that momentum into the fourth quarter and into 2026, So like Mark said, we're not giving guidance but.
Thanks Caitlin. Um, overall, you know, we've set our guidance, uh, in March early on and we've been consistent with that, uh, throughout the year. And when you look at the midpoint of our guidance that implies, you know, a slight acceleration, then to end the fourth quarter from what we've delivered to date, and we feel good about that commitment. And so that was the the decision behind, um, you know, keeping the guidance, the same and, and feel like that's a good, you know, the range that we set at the beginning of the year is a little tighter than we normally would. So overall, we still feel good about. Um, our guidance for for 2025 when we look into, uh, 2026, you know, at this point in time, we're really excited about the, uh, 2026. We've talked about our growth opportunities and, and the pns
Our growth strategy is in full action, we really feel like we've entered a new phase here and we're leveraging our core businesses.
Our driving that above market profitable growth to invest in and drive our faster future growth businesses with the ultrasonics BNS PRP and international So we'll give you a lot more detail on that when we provide our guidance for next year, but we feel good about the path ahead.
And Ultrasonics and international, but we're not going to give guidance for for 2026 right now. Um, but you know, we do have some exciting, uh, opportunities as we've talked about throughout the call and and, uh, and look forward to sharing our thoughts on 2026 and the March earnings call.
Great and then just with exiting continues to be strong where the same dynamics going on with commercial execution that really drove the strength. This quarter I think prior quarters or was it something something else.
Yes, it's consistent with what we've shared in the past. This is now we've generated double digit growth in restorative therapies for two quarters in a row and validated.
Validates the positive combination of focus fantastic leadership and team the right strategy smart investments and stronger execution and which in turn is demonstrating a favorable ROI on our investments. So it's a.
26. So like Mark said, we're not giving guidance but you know, it's uh our growth strategy is in full action. You know, we really feel like we've entered a new phase here and we're leveraging our core businesses which are driving that above Market profitable growth to invest in and drive our faster. Future growth businesses with the Ultrasonics, pns PRP, and international. So we'll give you a lot more detail on that.
Our guidance for next year, but we feel good about the path ahead.
Great. And then, just with oxygen, you know, continues to be strong.
Can't say enough about the great team.
And what they are doing with that business.
What are you seeing a sustainable growth for epogen. After five years of decline and we believe that we can grow this business to over $100 million with that combination that I mentioned, yes. Thanks to the dedicated team and our proven technology, which truly helps patients recover so they can live life to the fullest.
For the same Dynamics, um, going on with commercial execution, that really drove the strength this quarter as in Prior quarters or was it something something else?
Yeah.
Great. Thanks for taking the questions.
Thank you.
This concludes our question and answer session I would now like to turn the conference back over to Rob Glaser for any closing remarks.
Alright, thanks, everyone for your interest in Bob Ventas. Once again, we delivered a solid performance throughout our business in the third quarter and we are confident in our ability to build on our momentum to deliver above market revenue growth improved profitability and accelerate our cash flow to create significant shareholder value. Thank you.
Yeah, it's consistent with what we've shared in the past. You know, this is now we've generated double digit growth and restorative therapies. For 2 quarters in a row and it validates, the positive combination of of focus, fantastic leadership and team the right strategies, smart, Investments, and stronger execution. And you know, which in turn is demonstrating a favorable Roi on our investments. So it's, uh, uh, can't say enough about, uh, the the great team and, and um, and what they're doing with that business. And, you know, it's a, what you're saying is sustainable growth for oxygen after 5 years of Decline? And we believe that, you know, we can grow this business to, to over a hundred million dollars with that combination that I mentioned, you know, thanks to the dedicated team and, and our proven technology, uh, which truly helps patients recover so they can live life to the fullest.
Great. Thanks for taking the questions.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Rob. Clayful. Fuller any closing remarks.
All right, thanks everyone for your interest in bioventus once again, we delivered a solid performance throughout our business in the third quarter, and we are confident in our ability to build on our momentum to deliver above Market Revenue growth, improved, profitability, and accelerate, our cash flow to create significant shareholder value. Thank you.
the conference is,
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