Earnings call transcript: Enovis beats Q3 2025 expectations with strong revenue growth

Enovis Corp (NASDAQ:ENOV) delivered a robust performance in the third quarter of 2025, surpassing analyst expectations with an earnings per share (EPS) of $0.75 against the forecasted $0.649, marking a 15.56% surprise. Revenue reached $549 million, exceeding the forecast of $538.61 million, driven by a 9% year-over-year increase. Despite the positive earnings report, Enovis shares saw a pre-market decline of 1.24%, trading at $31.10.

Key Takeaways

• Enovis reported a 15.56% EPS surprise, significantly above expectations.
• Revenue climbed 9% year-over-year, reflecting strong organic growth.
• Pre-market trading saw a 1.24% decline in Enovis stock, despite solid earnings.
• The company divested its Doctor Comfort business for up to $60 million.
• Enovis continues to focus on innovation, with new product launches planned.

Company Performance

Enovis demonstrated strong financial health in Q3 2025, with a 9% increase in revenue to $549 million, supported by 7% organic growth. The company improved its adjusted gross margins by 140 basis points and maintained an adjusted EBITDA margin of 17.3%. While the company faced a non-cash goodwill impairment of $548 million, its focus on operational excellence and innovation has kept it competitive in the orthopedic implants and rehabilitation markets.

Financial Highlights

• Revenue: $549 million, up 9% year-over-year
• Earnings per share (EPS): $0.75, up 3% year-over-year
• Adjusted gross margin improvement: 140 basis points
• Adjusted EBITDA margin: 17.3%
• Non-cash goodwill impairment: $548 million

Earnings vs. Forecast

Enovis outperformed market expectations with an EPS of $0.75, compared to the forecast of $0.649, resulting in a 15.56% earnings surprise. Revenue also exceeded projections, coming in at $549 million against an expected $538.61 million, marking a 1.91% surprise. This strong performance highlights Enovis’s ability to effectively manage its operations and capitalize on market opportunities.

Market Reaction

Despite the positive earnings report, Enovis’s stock experienced a pre-market decline of 1.24%, trading at $31.10. This movement contrasts with the broader market trend and may reflect investor concerns over the non-cash goodwill impairment or broader market volatility. The stock remains within its 52-week range, with a high of $49.75 and a low of $25.47.

Outlook & Guidance

Looking ahead, Enovis has provided full-year 2025 revenue guidance of $2.24 to $2.27 billion and adjusted EBITDA guidance of $395 to $405 million. The company anticipates continued free cash flow generation and is focused on debt reduction and lowering leverage. Upcoming product launches, such as the ARVIS Ultra, are expected to drive future growth.

Executive Commentary

CEO Damien McDonald emphasized the company’s commitment to operational excellence and innovation, stating, "We’re very focused on commercial execution, operational excellence, and financial discipline." He also highlighted the growth potential in the US hip and knee markets, noting, "We still believe that US hip and knee is a big growth driver for us."

Risks and Challenges

• Non-cash goodwill impairment: $548 million impact on financials.
• Market volatility: Potentially affecting investor sentiment and stock performance.
• Pricing pressures: Ongoing challenges in maintaining competitive pricing.
• Supply chain disruptions: Possible impact on product availability and costs.
• Regulatory changes: Potential challenges in adapting to new healthcare regulations.

Q&A

During the earnings call, analysts inquired about the potential slowdown in US procedure volumes, to which the company reported no significant decline. Positive feedback from surgeons on the ARVIS Ultra was also discussed, along with ongoing portfolio management and tariff mitigation strategies.

Full transcript - Enovis Corp (ENOV) Q3 2025:

Carrie, Conference Operator: Morning. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Enovis third quarter 2025 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. As a courtesy to all participants, we ask that you limit yourself to one question and one follow-up. I would now like to turn the call over to Kyle Rose, Vice President of Investor Relations. Please go ahead.

Kyle Rose, Vice President of Investor Relations, Enovis: Good morning, everyone, and thank you for joining us today for our third quarter 2025 results conference call. I’m Kyle Rose, Vice President of Investor Relations. Joining me on the call today are Damien McDonald, Chief Executive Officer, and Ben Berry, Chief Financial Officer. Our earnings release was issued earlier this morning and is available in the Investor section of our website at enovis dot com. We have also posted a slide presentation in relation to today’s call, which can also be found on our website. Both the audio and the slide presentation of this call will be archived on the website later today. During this call, we’ll be making some forward-looking statements about our beliefs and estimates regarding future events and results.

These forward-looking statements are subject to risks and uncertainties, including those set forth in the safe harbor language in today’s earnings release and in our filings with the SEC. Actual results might differ materially from any forward-looking statements that we make today. The forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them except as required by law. For further details regarding any non-GAAP financial measures referenced during the call today, the accompanying reconciliation information relating to those measures can be found in our earnings press release and in the appendix of today’s slide presentation. With that, let me turn it over to Damien. Damien?

Damien McDonald, Chief Executive Officer, Enovis: Hey, thanks, Kyle. Good morning, everyone, and thank you for joining us today for our third quarter earnings call. Since our last call, I’ve had the opportunity to meet more of our customers and team members, and I see a company with extraordinary talent and a unique portfolio spanning orthopedic implants, bracing, rehabilitation, and enabling technologies, which empower surgeons, clinicians, hospital leaders, and distribution partners to improve patients’ lives across the entire orthopedic continuum of care. Our solid third quarter results reflect strong performance broadly across the portfolio as we increasingly focus on commercial execution, operational excellence, and capital allocation. Third quarter revenue grew 9% on a reported basis and 7% organically. On an organic basis, recon grew 9%, prevention and recovery grew 4%, and we generated nearly $30 million in free cash flow. Our recon business delivered another quarter of strong, balanced growth. In US recon, we grew 7%.

Led by double-digit growth in extremities. Our augmented reverse glenoid system, ARG, continues to gain traction. What’s exciting here is that we’re still very early in the launch cycle, and there are additional products in the pipeline to support a multi-year cadence of innovation in extremities. In hips and knees, we grew 6% in implants, adjusting for the prior year sales of enabling technology, and we continue to reinforce our portfolio to compete across hospital and ASC settings. The new products we’ve launched, Nebula Stem and OrthoDrive Impactor, are performing well, and surgeon feedback continues to be excellent. Internationally, we grew 12%, and this is where the LimaCorporate integration is driving value and producing benefits. We’re executing across the cross-selling synergies we targeted in all anatomies. These are deliberate, strategic wins that position us for sustained international growth against strong competitors.

We showcased the next-generation ARVIS at ASES and Orkus last month. Surgeon response to ARVIS Ultra was outstanding. It’s lighter, faster, and adds capabilities like soft tissue balancing for knees and advanced shoulder applications. ARVIS continues to track for a broader launch in the first half of 2026. Now, moving to P&R, we delivered 4% organic growth with strength in bone stem, revenue cycle management, and our spine bracing products. Adjusted gross margins increased 110 basis points year over year, driven by product and geographic mix, as well as EGX-driven initiatives across both our manufacturing and supply chain. We completed the divestiture of Doctor Comfort in early October. This was an important transaction in support of our purposefully shaping our business. I very much want to thank the entire Doctor Comfort team for their contributions as part of the Enovis family.

We’re confident that as part of the Promise Equity Partners portfolio, Doctor Comfort has found an ideal environment to achieve its full potential. This transaction, coupled with our focused investment in innovation and growth, has resulted in over 50% of our P&R portfolio now growing mid-single digits or better. I’ll now turn it over to Ben to walk through the financial details.

Ben Berry, Chief Financial Officer, Enovis: Thanks, Damien, and hello, everyone. We are pleased to report third quarter sales of $549 million, up 9% versus the prior year on a reported basis, including a 190 basis point benefit from foreign currency and 7% organic growth. Our recon business grew 9% organically, led by double-digit growth in extremities and 7% in hips and knees globally. Prevention and recovery grew 4% organically, reflecting continued stability and mixed benefits across the portfolio. Year-to-date organic growth is 7%, including 10% in recon and 5% in P&R, a clear sign of balanced momentum across the business. Adjusted gross margins improved 140 basis points in the quarter. Driven by favorable mix, ongoing productivity in manufacturing and supply chain, and slightly offset by tariff impacts. Adjusted EBITDA margin was 17.3%. Down 60 basis points year over year, reflecting planned R&D investments, phasing of expenses, and tariffs.

Year-to-date, we’ve expanded gross margins over 170 basis points and increased adjusted EBITDA margins by 40 basis points. Third quarter effective tax rate was 21.8%. Interest expense was $9 million for the quarter, down from $11 million last year. As a result, adjusted earnings per share was $0.75, up 3% versus prior year. Year-to-date, adjusted EPS is up 27%, driven by margin expansion and reduced interest expenses. Additionally, we recorded a non-cash technical impairment of goodwill of $548 million in the quarter due to a sustained decline in our share price and market capitalization. This impairment does not have any impact on Enovis’s liquidity, cash flows, debt covenants, nor does it have any impact on future operations.

We are still very confident and optimistic in the long-range plans we’ve communicated and believe our execution against yearly financial commitments since the spin has demonstrated a strong track record of operational performance. In early October, we announced the sale of our diabetic foot care business, Doctor Comfort, to Promise Equity Partners for up to $60 million, including $45 million in upfront cash, which will be used to reduce debt. The transaction sharpens our focus on core P&R markets and aligns with our strategy of concentrating on higher growth, higher margin opportunities. Doctor Comfort represented roughly 5% of P&R sales year-to-date. As a result of this sale for the fourth quarter, the impact to our revenue outlook is expected to be $15 million, and we plan to absorb the modest impact on margins and operating cash flow. Turning to guidance, we are updating our full year 2025 outlook.

Due to our positive Q3 performance and the divestiture of Doctor Comfort, we are adjusting revenue guidance by $5 million to $2.24-$2.27 billion, with no change to our organic growth guidance. We are also raising our profit and earnings outlook. We now expect adjusted EBITDA in the range of $395-$405 million. This is a $3 million increase to the range and is inclusive of a more favorable tariff outlook, solid Q3 results, and the negative impacts from the divestiture. As we have previously communicated, the tariff situation remains very fluid. We paid $4 million of tariffs in Q3, still mostly related to P&R. We are beginning to feel the impacts in the P&L as the new costs have worked their way through inventory. However, we continue to execute against our mitigation action plans in effort to offset this inflation.

No adjustments have been made to our outlook for depreciation, interest, tax rate, or share count. We are also raising our adjusted EPS guidance by $0.05 to $3.10-$3.25. We continue to expect positive cash flow for the year, which we will prioritize towards debt reduction and lower leverage levels as we exit 2025. To summarize, through nine months, our results highlight the resilience of our platform, the strength of our diversified portfolio, and the progress we’re making towards sustainable, profitable, capital-efficient growth. The underlying fundamentals of the business are improving, and we will continue to manage the business responsibly through this dynamic environment as we maintain progress towards our strategic goals and financial commitments. Kyle?

Damien McDonald, Chief Executive Officer, Enovis: Thanks, Ben. In an effort to accommodate everyone in the Q&A session and keep things to a reasonable time, we ask that analysts keep their questions to one question and one follow-up. You’re welcome to rejoin the queue, and we’ll fit you in if we have time. With that, operator, we’d like to now open it up for questions.

Carrie, Conference Operator: Thank you. As a reminder, if you’d like to ask a question, please press star and the number one on your telephone keypad. Your first question will come from Zach Chopper with Wells Fargo.

Hey, good morning, and thank you for taking the questions. Congrats on a nice quarter. Two for me here. Maybe starting off first, one of your larger competitors yesterday called out a modest slowdown in the U.S. provision market for both hips and knees. I’m just curious if you’re seeing that dynamic play out as well.

Damien McDonald, Chief Executive Officer, Enovis: Good morning, Vic. How are you? Thanks for joining. Look, so far, Q4 procedure volume seems healthy and stable. Look, historically, our markets have been resilient. And look, there’s no secret there are lots of factors affecting sentiment at the moment: entitlement cuts, government policy, changes in government. Inflationary concerns. So all of these could weigh on volume, but right now, we’re seeing healthy and stable volumes.

Okay, that’s helpful. Given where we are in early November, I’m just wondering how you’re thinking about the actual headwinds and tailwinds in 2026. If high single-digit recon growth is still on the table for next year. Thank you.

Ben Berry, Chief Financial Officer, Enovis: Yeah, I mean, Vic, we’re still going to see how the year plays out with regards to thinking how 2026 momentum is going to take us. Overall, I think we still see that as a potential for this business. We’re not guiding on 2026 right now.

Carrie, Conference Operator: Your next question will come from Young Lee with Jefferies.

All right, great. Thanks for taking our questions. I guess to begin, I wanted to hear a little bit more, Damien, now that you’ve been in the seat for a while longer now. I wanted to hear your perspective on portfolio management and transformation. Obviously, the deal you’ve done with Doctor Comfort is helping to streamline the portfolio. Should we expect more to happen on that front going forward?

Damien McDonald, Chief Executive Officer, Enovis: Good morning, Young. Yeah, we’re very focused on three things: this commercial execution, and again, I think you saw that read-through in the quarter, the operational excellence, and we’ve talked about EGX a lot in the past, but we’re really doubling down on that. The last thing is this financial discipline, and we’re taking a look across the whole portfolio, not only things like Doctor Comfort, but SKU rationalization and how we think about cash generation. I would say everything’s on the table, but being very focused on those three things is important for us in the near term.

Okay, great. Very helpful. Can you maybe help level set us a little bit on the ARVIS Ultra full launch? How should we expect the pace of that? Following the full launch next year and maybe a few years down the line?

Yeah, so I think given the reaction we had at ASUS and Orkus, we’re very pleased with the way we’ve approached this. I know we talked about our delay last quarter, but doing that with the software and the hardware, I think really read through in terms of the response we had from surgeons as we did the demos. We had a lot of traffic at both of those conferences. Our model is being examined, like how we think about our go-to-market and offering lots of flexibility in terms of the financial model for customers to purchase, lease, or commit to implants. We’re working through that as we launch this in Q1, Q2 of 2026 as we go to our broader expansion.

All right, great. Thank you.

Carrie, Conference Operator: Your next question will come from Robbie Marcus with JPMorgan.

Hi, this is Allen on for Robbie. I guess. First question is, as you’ve highlighted, the broader markets remain healthy so far in fourth quarter. How should we think about the drivers of upside to your current guide and where you see that kind of positioning you for 2026?

Damien McDonald, Chief Executive Officer, Enovis: Morning, Allen. How are you? Thanks for taking the call with us. I think our upsides are really around this commercial execution in terms of the growth levers. Now, as I said, we’re very focused on this with the commercial organizations. We just went through the quarterly business reviews with the business units in the US. We’re very focused on things like account acquisition, account penetration. We’re very focused on the way we think about prioritizing our innovation. We’re very focused on customer segmenting, customer targeting. In terms of the growth line, these are the things we’re doubling down on. In terms of margin and reading through in the P&L, looking at gross margins, setting up war rooms on that for the various business units, working capital, Kaizens, focusing on cash flow with accounts receivable. Looking at the SKUs and the portfolio and rationalizing inventory.

They’re all things that are important for us. A lot of these things don’t happen on a dime, but we’re of the belief that all of this reads through in 2026.

Got it. And then just a quick follow-up. It was good to see continued progress on free cash flow this quarter. How are you thinking about setting that up for 2026, what your priorities are between debt repayment and other methods of redeploying capital?

Yeah, thanks, Allen. Our clear focus is on debt paydown and reducing our leverage levels. If you look at our latest trailing 12 months, we’re now down into the low threes from a leverage ratio. We’re making progress on cash flow. As I’ve communicated in the past, we see some significant step-downs in terms of integration costs and European medical device regulation costs in 2026. We expect our momentum and free cash flow generation to continue as we step into 2026.

Carrie, Conference Operator: Your next question will come from Vijay Kumar with Evercore ISI.

Hi, Damien. Good morning, and thank you for taking my question. My first one is on US recon and ARVIS specifically. You mentioned positive feedback to the new launch. I’m wondering. I know you called out the $3 million capital headwinds. Were there any implant sales, utilization-based kind of agreements? Meaning, could this lack of ARVIS right now have had an impact on your implant sales right now? When you think about ARVIS coming back next year, should implant US hip and knees, which has been trending around mid-singles, should that accelerate?

Damien McDonald, Chief Executive Officer, Enovis: First, good morning. Hi, Vijay. Listen, on the implant impact for the delay, no, we haven’t seen any impact on implant sales because of the delay. Going forward, we’re looking forward to engaging with people around implant utilization. We expect that the whole program is an interconnected ecosystem. Not only do people find some way to engage with ARVIS just in and of itself, but also to drive implants. The whole program is an ecosystem approach. Yeah, and I’d just weigh in there too, Vijay, and say, I mean, we still believe that US hip and knee is a big growth driver for us. Our funnels are solid in terms of customer conversion, and we continue to invest in innovation for this portfolio, not only in enabling tech, but in implants as well.

We expect this business to continue to be a growth driver for us.

Understood. Maybe, Ben, one on your Q4 guidance assumptions. I know you have days headwinds. Could you just remind us on what the days headwinds to growth is in Q4? I’m looking at your EPS implied. At the high end, EPS is flat-ish Q on Q. Historically, you’ve had a pretty big step-up for Q4. Why are margins flat? Are your tariff assumptions changing here for Q4, or is this the divestiture impact? Any color would be helpful.

It’s a combination of those things, Vijay. I mean, I’d say from a days perspective, as we laid out at the beginning of the year, we had extra days in Q1. Those all come out in Q4. It’s going to be a 4+% headwind to growth in the quarter. As we look at Q4, you’ve got the. We’ve paid $10 million year-to-date on tariffs. That’s starting to read through. We had about a 50 basis point impact to EBITDA margins in Q3 as a result of tariffs. We’re mitigating some, but some of it’s starting to read through. That will continue to read through in Q4. There’s a modest impact due to the divestiture as well. All those things factor into how you’re thinking about the EBITDA guidance for Q4.

Thank you.

Carrie, Conference Operator: Your next question will come from Caitlin Roberts with Canaccord Genuity.

Hey, guys. This is Mikaela for Caitlin. Congrats on a great quarter, and thanks for taking the questions. You noted softer volumes in foot and ankle on the Q2 call, but you said you expected some back half acceleration. Can you talk more about how that trended in the third quarter?

Damien McDonald, Chief Executive Officer, Enovis: Yeah, good morning, Mikaela. Yeah, so actually, we did see a bit of a rebound in that space, which is great. Meeting with the team at the AOFAS conference in Savannah was a pretty exciting time for us talking about MIS surgery. We talked a lot about how there’s a very solid order book in terms of the way that market’s rebounding. We’re continuing to see this team execute. We’ve got a lot of investment in innovation and customer engagement with them. We’re looking forward to them being a growth driver for us.

Great, thanks. Just one more from us, maybe. Can you talk about your thoughts on the J&J-DePuy spinoff and if that could create some long-term opportunities for you guys?

It’s not my place to comment on that. I think J&J make portfolio decisions all the time that are interesting. We look forward to competing with whoever owns it.

Got it. Thanks.

Carrie, Conference Operator: Your next question will come from Mike Matson with NEDA.

Yeah, thanks. On the Doctor Comfort divestiture, is it possible to quantify the margin or growth accretion from that? I mean, is it even material that we would see it in the overall company margins and growth rate?

Damien McDonald, Chief Executive Officer, Enovis: Hey, Mike, how are you doing? I think it’ll give us a little bit of a tailwind as we think about both growth and margin. We laid out on the slides that we produced today in terms of the contribution of what we’ve seen to that business on revenue year-to-date. It’s lower than the fleet average company margins. We’ll have a little bit of tailwind. As I think we’ve discussed before, it’s a business that’s been flat to declining in the past. This year, it’s been restabilized. Overall, I think it’s accretive to both growth and margins for us. Not materially, but will give us a little bit of help as we focus on shaping that portfolio.

Okay, thanks. The slides called out U.S., I guess, hip and knee was down 1% because of a capital order comp or something like that. Can you maybe explain what that capital was? Was it instrument sets to distributors or ARVIS or something like that that you had a year ago that did not recur, essentially? Is that what happened?

Yeah, I think we laid this out a little bit last quarter is that we’ve been selling ARVIS last year as we were seeding the market. Especially in teaching institutions and things like that. We were selling $2 million-$3 million a quarter of ARVIS last year as we were starting to build that portfolio out. Given the delays to the launch of the new platform this year, all that’s been put on pause. For this quarter and even next quarter, we’ll have some headwinds due to capital sales that we saw in 2024.

Okay. The implants in the U.S., I think it says that was up mid-single digits, correct? The hip and knee implants part of the business. Okay, got it. Thanks.

That’s right. You got it.

Carrie, Conference Operator: Your next question will come from Russell Yun with William Blair.

Hey, everyone. Thanks for taking the question. I wanted to focus first on the strength in recon internationally. Could you maybe talk about the dynamics at play here with cross-selling and maybe more specifics or anecdotal information on what you’re seeing in terms of acceptance or feedback from respective product launches?

Damien McDonald, Chief Executive Officer, Enovis: I think there’s a few things. Thanks for the question. We talked specifically about cross-selling. I think we’re seeing that read through. Things like the Prima and SMR shoulder portfolio now really give us a chance to talk about how to grow portfolios. In terms of product focus, we’re seeing good growth. Also in terms of geographic jurisdictional growth, I think the team is doing a better job. In-country execution. I think both of those are reading through.

Got it. Thanks. Maybe I’m not asking for formal guidance on 2026, but maybe how should we think about general impact of new product launches like Nebula and OrthoDrive going into Q4 and then maybe its momentum into 2026 and what exactly are you most excited about?

Yeah. We believe that innovation is critical for our ability to grow above market in recon like we’ve demonstrated now for quite a long period. That will continue to weigh into how we think about this business from a growth going forward. I think I was asked earlier about the momentum there in terms of growth rates of recon. We still very much believe recon will be a growth driver for us and above market. High single-digit plus for that business is our expectation for sure. Overall, I’d say all these new product launches are contributors to that and building momentum as we’ve laid out during the course of this year. They’re beginning to scale. They should give us some help as we think about that above market growth in 2026.

Carrie, Conference Operator: Your next question will come from Danielle and Taffy with UBS Financial.

Hey, good morning, everyone. Thanks so much for taking the question. Just a quick question on the new product launches. Just curious about, as we think about Nebula, ARVIS launching in first half next year, how you think about the contribution of price versus volume. That’s the first question. I just had one follow-up on the ramp of those products.

Damien McDonald, Chief Executive Officer, Enovis: Yeah. Morning, Danielle. All of the new product launches we anticipate will help us mitigate what are market headwinds in price. We’re making good progress in terms of the way we are able to execute new product launches. You see that read through. We’re making good progress on our account acquisition. All of these things we believe help mitigate what are secular headwinds in price.

Gotcha. Okay. Thank you. I was curious if you guys can talk about the split between hips and knees. Was there a major difference in growth or what you’re seeing in market dynamics between the two? That’s it for me. Thanks so much.

Yeah, Danielle. I mean, I think if you think about, if you’re talking about U.S. in particular, both implant systems are growing probably in about the same range. We expect to see some acceleration in hip given the new product launches. Revisions for knees have been performing well for us as well. We expect ARVIS, what will help to accelerate this category as well as we think about into the future. Overall, we don’t break it out specifically, but I can tell you both sides of the equation there are growing for us.

Thank you so much.

Carrie, Conference Operator: Once again, ladies and gentlemen, for any questions or comments, please press star then the number one on your telephone keypad. Your next question will come from Dane Reinhardt with Baird.

Hey, guys. Good morning. Thanks for taking the questions here. I guess I’ll follow up a little bit maybe on Danielle’s first question, kind of price mix related. I know back a few years ago when inflation was running a little bit higher, you got some price benefits in P&R. Can you just talk about if you’re able to kind of pass through similar pricing, maybe given some of the tariffs that you’re absorbing? That’s question one. To follow up on that, maybe within extremities, obviously shoulder, it sounds like it’s a little bit above that 13%. ARG has been a good contributor to that. Can you also talk there about, I think you’ve got a price tailwind with that product? Maybe how much of that recent strength is due to new competitive converts versus just upgrading existing shoulder users?

Damien McDonald, Chief Executive Officer, Enovis: Hey, Dane, thanks for the question. On P&R, we’ve laid out clearly that part of our mitigation efforts against the inflation coming in from tariffs is to leverage price. We have introduced some increases there to offset some of the impact. We’re being a little cautious just given the market dynamics that are currently at play there. It will continue to be one of the tools in our toolkit as we think about trying to manage through this inflation that’s come into the system as we go forward. On the Recon side, particularly in shoulder, I would say that ARG continues to be a weapon for us as we think about converting customers. It allows us to drive deeper penetration in current accounts. We’re seeing both happen right now. We think there’s still a nice runway in front of us.

ARG to continue to drive momentum in our extremities platform as we go into next year and beyond. As we think about pricing, like-to-like pricing, we have not seen a whole lot of changes happening there. If you think about the mix elements, ASCs, we continue to drive penetration in our portfolio into ASCs, hips, knees, shoulders, all increasing year over year in terms of number of implants going through that side of care. In that case, we have some price pressure from a mix standpoint. It is being offset by some of the premium products that we are launching like ARG and revisions and knees that continue to perform well for us, offset that a little bit. We would expect as we start to drive ARVIS into the market, that can be a bit of an offset to some of the pricing declines as well.

As for us, we’re a volume game in terms of growing above market. That plus some of the mix of our portfolio with extremities is driving our ability to continue to grow gross margins as well.

Thanks. Then my follow-up is on free cash flow. Obviously, you talked about some of the integration-related costs coming down next year, same thing with the EUMDR expenses. Can you just remind us what your long-term target is in terms of free cash flow conversion? I think it was something around 70-80%. One, is there a timeline on that? Then two, any thoughts for where you could maybe shake out for 2026 specifically? Thanks, guys.

Yeah. Yeah. I think from our standpoint, it continues to be a key focal point for us to get up the cash flow curve. We see line of sight to 70-80% free cash flow conversion against adjusted net income. We’ll continue to make progress towards that goal as we step into next year, but we’re not guiding for next year at this point in time.

Carrie, Conference Operator: There are no further questions at this time. I’d like to turn the call back over to Damien for any closing remarks.

Damien McDonald, Chief Executive Officer, Enovis: Thanks, Kerry. On the last call, I outlined three near-term priorities: commercial execution, operational excellence, and financial discipline. We’re making steady progress across all three and continue to believe in the value creation opportunities ahead of us. I’d like to thank all our teams who work tirelessly to bring our innovative solutions to clinicians and improve patients’ lives through mobility. Thanks for joining us this morning, and we look forward to sharing our fourth quarter and full-year results with you in February.

Carrie, Conference Operator: Thank you for your participation. This does conclude today’s conference. You may now disconnect.

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