Earnings call transcript: Integer Holdings Q2 2025 sees solid growth in sales and EPS

Integer Holdings Corporation (market cap: $3.6 billion) reported robust financial results for the second quarter of 2025, showcasing strong year-over-year growth. The company’s revenue reached $476 million, marking an 11% increase, while adjusted earnings per share (EPS) rose to $1.55, up 19% from the previous year. The stock remained stable, closing at $102.1, reflecting a 0.7% increase from the previous day. According to InvestingPro analysis, the stock is currently trading slightly below its Fair Value, presenting a potential opportunity for investors.

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Key Takeaways

• Integer Holdings reported an 11% increase in Q2 2025 sales, totaling $476 million.
• Adjusted EPS grew by 19% year-over-year, reaching $1.55.
• The company maintained a $700 million order backlog, with 70% of its business under long-term contracts.
• Strong performance was noted in the Cardio and Vascular solutions segment, with a 24% sales increase.

Company Performance

Integer Holdings demonstrated significant growth in the second quarter of 2025, driven by strong performance in its Cardio and Vascular solutions. The company’s adjusted EBITDA increased by 10% to $99 million, and adjusted net income rose 23% to $55 million. These results highlight the company’s ability to outperform market growth in key segments, particularly in electrophysiology and neurovascular markets. InvestingPro data shows the company maintains a healthy financial position with a strong current ratio of 3.41x and has achieved a 5-year revenue CAGR of 6%, demonstrating consistent growth.

Financial Highlights

• Revenue: $476 million, up 11% year-over-year
• Adjusted EBITDA: $99 million, up 10%
• Adjusted operating income: Increased by 15%
• Adjusted net income: $55 million, up 23%
• Adjusted EPS: $1.55, up 19%

Outlook & Guidance

The company provided guidance for the full year 2025, expecting sales between $1.85 billion and $1.876 billion, representing 8-9% growth. Adjusted EBITDA is projected to be between $402 million and $418 million, with adjusted EPS forecasted to range from $6.25 to $6.51. Integer Holdings anticipates continued margin expansion and operational improvements. Analysts maintain a bullish outlook on the stock, with consensus recommendations showing strong buy signals and price targets suggesting significant upside potential. Access detailed analyst forecasts and comprehensive financial analysis through InvestingPro’s exclusive Research Report for Integer Holdings.

Executive Commentary

CEO Joseph Dziedzic highlighted the company’s strong performance in the first half of 2025, stating, "We delivered strong growth in the first and second quarter with sales up 9% and EPS up 17% in the first half of 2025." COO Payman Khales added, "Our guidance midpoint of guidance has not changed. We just narrowed the range, just given the good visibility that we have for the year."

Risks and Challenges

• Potential tariff impacts, estimated to be minimal, ranging from $1 million to $5 million.
• Variability in demand between quarters, which could affect revenue consistency.
• The need to maintain operational efficiency amidst increasing manufacturing capacity.

Q&A

During the earnings call, analysts inquired about the potential impacts of tariffs, demand variability, and the company’s exposure to emerging medical technology markets. Executives emphasized their strong backlog and customer contract visibility, highlighting opportunities in electrophysiology and the Renal Denervation market.

Full transcript - Integer Holdings Corp (ITGR) Q2 2025:

Tina, Conference Operator: Thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the Integer Holdings Corporation second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. Thank you. I would now like to turn the conference over to Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations. You may begin.

Unidentified Speaker: Good morning, everyone.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Thank you for joining us and welcome to Integer’s second quarter 2025 earnings conference call. With me today are Joseph Dziedzic, President and Chief Executive Officer, Payman Khales, President and CEO-elect and Chief Operating Officer, Diron Smith, Executive Vice President and Chief Financial Officer, and Kristen Stewart, Director of Investor Relations. As a reminder, the results and data we discuss today reflect the consolidated results of Integer for the periods indicated during the call. We will discuss some non-GAAP financial measures. For reconciliation of non-GAAP financial measures, please refer to the appendix of today’s presentation, today’s earnings press release, and the trending schedules which are available on our website at Integer.net. Please note that today’s presentation includes forward-looking statements. Please refer to the company’s SEC filings for a discussion of the risk factors that could cause our actual results to differ materially.

On today’s call, Joseph will provide his opening comments. Diron will then review our adjusted financial results for the second quarter 2025 and provide an update on our full year 2025 outlook. Joseph will come back to provide his closing remarks and then we will open up the call for your questions. With that, I’ll turn the call over to Joseph. Thank you, Sanjiv, and thank you to everyone for joining the call today. In the second quarter, we delivered another quarter of strong year-over-year results. Sales increased 11% on both a reported and organic basis. Our adjusted operating income grew 15% as we continue to expand margins, and our adjusted earnings per share grew 19% year-over-year to $1.55.

For the first half of 2025, we delivered a strong above-market performance with sales increasing 9% and adjusted operating profit increasing 14%, or one and a half times the rate of sales growth. With the first half now behind us, we are raising the midpoint of our adjusted operating income and EPS outlook. We are maintaining our sales outlook midpoint given our high visibility to customer demand while tightening the sales range. At the midpoint of our full year outlook, we expect to grow sales 8.5%, adjusted operating income 14%, and adjusted EPS 20%. It is an exciting time at Integer because we have a strong pipeline of new products concentrated in faster-growing end markets. Our margins are expanding as a result of our manufacturing and business excellence initiatives, and we continue to acquire and integrate tuck-in acquisitions that add or compound differentiated capabilities.

I am grateful for our associates around the world that are delivering for our customers and making a difference for patients. I’ll now turn the call over to Diron. Thank you, Joe. Good morning, everyone, and thank you again for joining today’s call. I’ll provide more details on our second quarter 2025 financial results and provide an update on our 2025 outlook. In the second quarter of 2025, we delivered strong financial results. Sales totaled $476 million, reflecting 11% year-over-year growth on both a reported and organic basis. Organic sales growth removes the impact of our Precision Coating and VSI acquisitions, the strategic exit of the portable medical market, and foreign currency fluctuations. We delivered $99 million of adjusted EBITDA, up $9 million compared to the prior year, or an increase of 10%.

Adjusted operating income grew 15% versus last year as we continue to make progress on our year-over-year margin expansion. Adjusted operating income as a percentage of sales expanded 50 basis points year-over-year to 17.1%, comprised of approximately 10 basis points from gross margin and 40 basis points from operating expense leverage. Adjusted net income for the second quarter 2025 was $55 million, up 23% year-over-year, while adjusted EPS totaled $1.55, up 19% from the same period last year. Turning to our sales performance by product line, cardio and vascular sales increased 24% in the second quarter 2025, driven by new product ramps in electrophysiology and incremental sales related to the Precision Coating and VSI acquisitions, as well as strong customer demand in neurovascular. On a trailing four-quarter basis, CNV sales increased 17% year-over-year with strong growth across all targeted CNV markets, driven by new product ramps and acquisitions.

For the full year 2025, we continue to expect CNV sales to grow in the mid-teens compared to the full year 2024. Cardiac rhythm management and neuromodulation sales increased 2% in the second quarter 2025, driven by strong growth from emerging PMA customers in neuromodulation and normalized CRM growth, partially offset by the planned decline of a neuromodulation program. Back in 2020, we announced the planned decline of this program, and we expect 2025 is the last year of decline on a trailing four-quarter basis. CRM and sales increased 5% year over year, primarily driven by strong growth from emerging PMA customers and neuromodulation. For the full year 2025, we now expect CRM to grow in the mid-single digits as compared to the prior year.

Our expectation of mid-single-digit growth is higher than our prior range of low to mid-single digits based on the strong order visibility we have to the balance of the year. Product line detail for other markets is included in the appendix of the presentation, which can be found on our website at Integer.net. In the second quarter 2025, we delivered $55 million of adjusted net income, up $10 million versus a year ago. This increase was driven mainly by operational improvements, which include higher sales volume, manufacturing efficiencies, operating expense management, and acquisition performance. We also benefited from lower interest expense as a result of our convertible debt offering in March 2025, as well as a lower adjusted effective tax rate.

Our adjusted effective tax rate was 19% for the second quarter of 2025, down from 20.7% in the prior year, and we now expect our full year 2025 rate to be within the range of 18.5% to 19.5%, lower than our prior outlook of 19% to 21%. In the second quarter, we experienced an FX headwind of $3 million or $0.09 of adjusted EPS. This is primarily due to the weakening U.S. dollar and its impact on U.S. dollar denominated receivables in our foreign entities. In our outlook, we have assumed no further weakening or strengthening of the dollar in relation to other foreign currencies, and we continue to enhance our hedging program to mitigate the P&L impact of foreign currency fluctuations. Additionally, the year-over-year increase in adjusted weighted average shares outstanding drove approximately $0.04 reduction to our adjusted EPS in aggregate.

Second quarter 2025 adjusted net income is up 23% year over year and adjusted earnings per share is up 19%, both growing much faster than our 11% sales growth, a very strong performance in the second quarter. In the second quarter 2025, we generated $44 million of cash flow from operations. Our CapEx spend in the second quarter was $19 million, which is in line with our full year outlook. As a result, free cash flow was $25 million in the second quarter, an increase of $9 million from the prior year or a 55% improvement at the end of the second quarter. Net total debt was $1.204 billion, which is a $25 million decrease compared to the first quarter 2025 ending balance.

Our net total debt leverage at the end of the second quarter was 3.2 times trailing four quarter adjusted EBITDA, within our strategic target range of 2.5 to 3.5 times. As Joe mentioned earlier, we are raising the midpoint of our adjusted operating income and EPS outlook while maintaining the midpoint of our sales outlook and tightening the sales range on both the high and low end. We expect sales to be in the range of $1.85 billion to $1.876 billion, an increase of approximately 8% to 9% versus last year. Given our strong first half sales and visibility to customer demand in the second half, we believe $1.863 billion is the appropriate midpoint of our outlook.

On an organic basis, we continue to expect sales growth to be within the range of 6% to 8%, which is approximately 200 basis points above our underlying market growth rate estimate of 4% to 6%. For adjusted EBITDA, we now expect a range of between $402 million to $418 million, reflecting growth of 11% to 16%. We now expect adjusted operating income between $319 million and $331 million, representing growth of 12% to 16%. This is an increase of $4 million on the low end and $2 million at the midpoint from our prior outlook. For adjusted net income, our outlook range is between $222 million and $231 million, an increase of 21% to 26% versus 2024. This is also an increase of $2 million at the midpoint, reflecting the higher operational performance, lower adjusted effective tax rate, and the first half foreign currency headwinds below operating income.

Lastly, we expect adjusted EPS of between $6.25 and $6.51, which is a growth of 18% to 23% on a year-over-year basis. This is a $0.05 increase at the midpoint. Our outlook assumes an adjusted weighted average diluted shares outstanding of 35.5 million shares for the full year 2025. In regards to the tariff landscape, we continue to expect a negligible impact in 2025, well within our range of $1 million to $5 million. Our expected reported sales growth of 8% to 9% for 2025 includes inorganic growth of approximately $59 million from the Precision Coating acquisitions, offset by an approximate $29 million decline from the previously announced Portable Medical Exit, which is expected to be completed by the end of 2025. We expect second half 2025 reported sales growth to be approximately 8% at the midpoint, with similar sales growth rates in the third and fourth quarter.

We expect adjusted operating income as a percentage of sales to increase throughout the remainder of 2025, driven by continued improvement in manufacturing efficiency and sales growth, outpacing our growth in operating expenses at the midpoint of the outlook. Adjusted operating income as a percentage of sales is now expected to expand 86 basis points in 2025 compared to the full year 2024. This is a 10 basis point improvement since our prior outlook. We continue to expect cash flow from operations to be between $235 million to $255 million, which represents a 20% year over year increase at the midpoint of the outlook. Our outlook for capital expenditures is unchanged at $110 million to $120 million as we continue to invest in capabilities and capacity.

As a result, we expect to generate free cash flow between $120 million and $140 million, which represents a 30% year over year increase at the midpoint. We expect our 2025 year end net total debt to be between $1,115,000,000 and $1,135,000,000, and we expect to end the year with a leverage ratio within our target range of 2.5 and 3.5 times trailing four quarter adjusted EBITDA. With that, I’ll turn the call back to Joe. Thank you. Thanks Diron. We delivered strong growth in the first and second quarter with sales up 9% and EPS up 17% in the first half of 2025. We are successfully executing our growth strategy to meet our financial objectives of growing organically above the market while expanding margins and maintaining our targeted debt leverage. We are confident this sustained level of performance will produce a premium valuation for our shareholders.

We will now turn the call over to our moderator for the Q and A portion of the call.

Tina, Conference Operator: Thank you. As a reminder, if you would like to ask a question, press Star one on your telephone keypad. We respectfully ask that you keep questions to one and one follow up. We will pause for just a moment to compile the Q&A roster. Our first question comes from the line of Brett Fishpin with KeyBanc Capital Markets. Please go ahead.

Unidentified Speaker: Hey guys, good morning.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Thanks very much for taking the questions. I just wanted to start off on the full year organic growth guidance update based on the Q2. Upside here would have maybe expected a revision, a positive revision to the full year just given where you are year to date. I was just hoping you could maybe walk through the bridge of the organic performance in 1H versus what you’re expecting in Q2H.

Unidentified Speaker: Yeah, hi. Good morning, Brad. This is Payman Khales. Hope you’re doing well. I hope the audio is okay. We have some technical difficulties. Can.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: You’re coming through clear. No technical difficulties through the call on my end.

Unidentified Speaker: All right, great. Excellent. Thank you very much. Let me address that your question was related to the second half. Second half organic performance. Let me just talk high level about the performance that we’ve talked about. For the year, we’re still pointing to the midpoint of a range of our guidance. The second half of the year we grew at 9%. The second half of the year we’re projecting at 8%. That kind of puts us at about 8.5% or $1,863 million at midpoint. Some of the color that I would add for the year is that we had a strong 2Q. That’s from a revenue perspective. There are a few things that drove that. We had some strong new product launches, some timeliness of that. Typically, Brett, within the quarters, we have some movements in terms of customer demand. Our customers sometimes shift their demand within the quarter.

That’s usually a small amount. We had something similar in the second quarter in the sense that some of the demand from 3Q came into 2Q. Lastly, we had talked about the expansion of our new Ross facility and executing the demand on that. That demand came fully online in the middle of last year and we’ve been executing customer demand and we executed a little bit more demand in 2Q than we had anticipated. All in all, that drove some strength into 2Q. If you really think about it, we had projected 2Q growth in the high single digits. We ended up at around 11%. That’s about 200 bps. You do the math, that’s about $10 million. Every single one of these things that I talked about added a few million to kind of make up that 200 bps.

Overall, I would look at the second half of the year of 8%. It kind of keeps our guidance the same at 8.5% at midpoint on $1,863 million. Maybe one more thing that I would talk about in the second half of the year, we’re going to be bumping against a tough comp in 4Q. In 4Q of last year, we had a very strong growth of 11%. We’re bumping up against some tough comps as well. All in all we think that the year at $1,863 million at midpoint is strong.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: All right, thank you for the color. Just one follow up question in cardiac rhythm management and neuro. Another quarter 2% growth, but it sounded like the full year outlook is actually improving a little bit from low to mid-single digits to mid-single digits. I was curious if you could maybe give a little more color there, if it’s coming from some of the new product ramps in neuromodulation or if you’re seeing a little bit of a better end market dynamic in cardiac rhythm management or anything else there. Thank you very much. Sure.

Unidentified Speaker: Hi Brad, it’s Joe.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: CRM and end, as you highlighted, the first half sales were 2% and our guidance for the year is mid-single-digit, which means second half needs to be in the high single digits and there’s two primary drivers. As you highlighted, neuromodulation gets better in the second half of the year based on some customer demand. Plus, we highlighted that there was a planned IPG customer decline that occurred in the first half that relents and is much less of an impact in the second half. That actually gets us about halfway from that 2% first half to the 8% or 9%, high single digits second half to get you to the midpoint of the guidance there, the mid-single digits. The other thing is the cardiac rhythm management actually picks up a little bit in the second half.

I wouldn’t highlight anything in particular, it’s just the timing of demand within our customers and how they’re running their operations. I’ll highlight just maybe broadly that we think the best way to look at the trajectory of the business and our sales trend is to look at a rolling four quarter basis as Payman highlighted. In any given quarter there’s variation driven by how customers are managing their plants. Just to remind everybody, the majority of what we do is sole source. The majority of what we do we ship to one of our customers’ manufacturing plants. It gets incorporated into one of their devices and then four to nine months later it shows up in a procedure. A rolling four quarter view, whether it’s trailing or looking forward at the full year, removes some of that noise and that variability in any given quarter.

That’s maybe what you were getting at about first half versus second half full year. We’re right in line with what we guided to at the beginning of the year, 8.5% sales growth, 1,863, the organic growth is the same for the full year. Slightly higher second quarter sales than what we were expecting and then what I think investors were expecting does not change our view of the full year. All right, thanks again.

Tina, Conference Operator: Your next question comes from the line of Joanne Wooich with Citi. Please go ahead. Good morning and thank you for taking the questions. If I mathematically do this correctly, it sounds like the second half of the year should be still strong in cardiovascular. You raised the second half of the year for cardiac rhythm management but maybe narrowed the full year revenue guide. Does that mean your other markets are declining maybe a little bit faster than expected? I’m just trying to essentially get to the same question of how do you deliver such a really strong second quarter and then sort of talk down the top end of your range. Thank you.

Unidentified Speaker: Yeah, good morning Joanne, this is Payman. Thanks for the question. Let me answer the mathematical question, if you will, and then I’ll try to add some color. At midpoint, our cardiac rhythm management guidance is 5%. Cardio and vascular solutions is mid-teens, which we’re looking at as 15%, and other markets is down $32.5 million. That’s because of the visibility that we have to the customer demand. With a backlog that we have, which is still in the range of about $700 million, that gives us good visibility. This is what guides us and why it makes us believe that the midpoint of $1,863 million is the appropriate place to be.

Tina, Conference Operator: Thank you. As my second question, is there any inventory management that is happening from your customers in the back half of the year, and as you go into 2026, as you think about managing tariffs? Thanks.

Unidentified Speaker: Yeah, yeah. Inventory going back a couple of years, Joanne, the second half of 2023 is when OEMs started sending some letters to their suppliers effectively saying that, look, they’re going to adjust their inventory after some period of supply challenges. Over the last couple of years, I would say that the inventory management is kind of more normalized. I think it’s important to understand one dynamic. Even when customers have been managing inventory, it’s not that they’re overstocking everything. Obviously, they’re overstocking some things and some other things that are needed for their production might be understocked. That’s kind of what drives a little bit of a variability. I mentioned earlier we had a little bit of a demand kind of coming from 3Q to 2Q. These are some of the things that drive that.

Really stepping back and looking at things, the backlog that we have, the visibility that we have, and the guidance that we provided takes all of that into account, Joanne. We think that $1,863 million, 8.5% at the midpoint is appropriate. I think the second part of your question was related to tariffs. For tariffs, it’s a dynamic landscape. Obviously, the tariff situation changes, including recently. We have maintained and continue to maintain that the impact on our business would be minimal. We are still iterating that range of $1 million to $5 million. We’ve mentioned that we are working to make that as close to $0 or $1 million as possible. That continues to be our plan. Our range of $1 million to $5 million potential tariff impact has not changed.

Tina, Conference Operator: Thank you very much. Your next question comes from the line of Nathan Trabec with Wells Fargo. Please go ahead.

Unidentified Speaker: Hi, thanks for taking the question. Just wanted to go back to CMV.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: It sounds like there was some pull.

Unidentified Speaker: Forward of demand into Q2. Can you just talk about if this.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: It was rapid building of inventories either for electrophysiology and neurovascular, and then there’s going to be a steady drawdown.

Unidentified Speaker: Of that inventory in the second half.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: I’m just trying to understand the parts for the deceleration in the second half. Can you confirm the mid-teens guidance for CMV is not organic? Yeah, thanks.

Unidentified Speaker: Yeah, thank you, Nathan. Thanks for the question. Let me add some color. Let me start with CNV had a very strong performance in 2Q at 24% reported, 18% organic, and 17% on trailing full quarter, which is really the way we think we should be looking at our performance within the business. There are a number of things. We talked about that. The performance of the CNV was driven by a few factors. We had some new product launches, we had strength in some new vascular customer demand. Specific to a question about the variability between the quarters, these are a combination of a few small things that kind of drove a little bit of a growth. There is a demand, you know, some demand profile, you know, changes between quarters and months. That’s natural, that’s normal. That’s normal part of our business.

In this case, it kind of came into 2Q from 3Q. Nothing unusual there. There is a little bit of a lumpiness usually associated with new product launches. If you think about a new product launch, there’s a launch phase, a ramp phase, there’s a stabilization phase. There’s some lumpiness associated with that. If you look at all of that, that’s why we had a little bit stronger in 2Q. Our view of the year has not changed. We have said that mid teens is our view for CNV for the year and we continue to maintain that. I think part of your question was whether this is organic. This is total reported at 16%. Okay, thank you for that.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: That’s very helpful.

Unidentified Speaker: Taemin, just at a high level, kind of as you’re stepping into the CEO.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Are there any strategic priorities you’re beginning to kind of formulate, and are there areas of improvement that you have your eyes set on? Thanks.

Unidentified Speaker: Yeah, that’s a great question. Thank you. As I’ve mentioned before, I’ve been with Integer, this is my eighth year. I’ve been part of the leadership team that has been developing and executing on our strategy the same way that we have done in the past eight, nine years. I very much intend to continue refining and building on our strategy and ultimately executing on that strategy so that we can outperform the market in growth and expand margin faster than that. The elements of the strategy that we’ve talked about, building capabilities, the growth markets that we have, the margin expansion activities that we have within through our manufacturing excellence, are very much intended to continue doing that. Those are important pillars of the type of business that we have and are critical for our success.

Obviously, we’ve talked about the fact that the tuck-in acquisitions to continue building capabilities and making sure that we stay within a reasonable range of leverage, 2.5 to 3.5, continues to be a very important element of our strategy.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Thanks.

Tina, Conference Operator: Your next question comes from the line of Craig Bigot with Bank of America. Please go ahead.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Good morning, guys. Thanks for taking the questions. Wanted to start with a follow-up on the Q2 performance, and apologies for asking again, but just trying to understand if you know, if you.

Unidentified Speaker: Would you be willing to quantify just.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: How much of that 11% versus the high single digits was from a pull forward of the orders or just maybe better than expected performance? I’m just trying to understand. I appreciate the comments that for the full year you guys still expect the same, but I just wanted to understand what was the surprise or what one piece of that surprise did or the outperformance was part of the pull forward.

Unidentified Speaker: Yeah, thank you for the question, Craig. Let me answer that. Let me first maybe ground us on the numbers. I think as you pointed out, the growth that we had in the quarter of 11% was a little bit higher than the high single digits that we had talked about. That’s about 200 bps. If you take that, do the math on the 200 bps on the quarter, that’s about, give or take, $10 million of revenue. It’s not a substantial revenue. Normally there are puts and takes within every quarter. There’s some demand that goes into the next quarter, some comes in. In this quarter, that little variability and every single one of those things that I talked about is just a few million bucks. In combination, it kind of drove that $10 million.

There was a little bit of the demand change and shift from a few of our customers on a few programs, every single one of them small. In combination, it was a few million. There was some acceleration of new product launches and as I mentioned earlier, we were able to execute a little bit faster in customer demand from our new Ross facility for Guidewire. Again, every single one of those events that I talked about is the same, is a few million bucks, but in combination it drove about 200 bps of revenue growth.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Got it. Thank you.

Unidentified Speaker: Payment. That’s helpful.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: You guys had a pretty strong quarter, a very strong quarter in cardio and vascular solutions. You called out the electrophysiology product ramp. Can you just help us understand how that rolling four quarter growth in electrophysiology has trended over the last several quarters? Has that accelerated? I assume it’s outpacing overall cardio and vascular solutions, but just wanted to get your perspective on how sustainable the electrophysiology growth specifically is over the next several quarters.

Unidentified Speaker: Yeah, thanks for the question. EP is one of the four growth markets that we have, the other three being structural heart, neurovascular, and neuromodulation. We’re excited about every one of them. We have worked in the past many years to continue investing and building capabilities and pipelines so that we can continue to outperform the market, which we believe we’ve been doing. Back to your question specifically about EP, let me just highlight that we have been present in EP for many, many years. We have built a lot of capabilities over the years and our participation in EP, there’s obviously a lot of excitement in the market right now with EP, with PFA. That’s kind of driving a lot of growth, which is also great for patients. We’re very excited about the technology that’s been driving, it’s been giving us some tailwinds.

I would highlight that our participation in EP is really across the procedure. It’s not just only in the ablation technology itself. We participate in access, in guide wires and transeptal sheaths, in diagnostics, and of course the ablation itself. We have good content across the procedure and that includes PFA, pulse field ablation. We have good momentum in that space and we got a strong pipeline. You mentioned whether we are outperforming the market. Yes, we believe we are. If you look at our trailing full quarter within CNV, that is one of the drivers of the growth that we have. We believe that we are outperforming the market and we continue to be very, very excited about the momentum that we have.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Thanks, guys.

Tina, Conference Operator: Your next question comes from the line of Richard Neuter with Truist Securities. Please go ahead.

Unidentified Speaker: Maybe just thinking both on the starting with the top line but also down.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: The P&L. If you have comments there, the 3Q versus 4Q kind of cadence and how you’re thinking about it, I guess it sounds like the pull forward or some of the overage. The roughly 200 basis points came mostly from 3Q or at least I’m guessing that’s where you have the most visibility. I’m not sure how much visibility you have out beyond three to five months. Given the comps, you have a much tougher comp in 4Q and it sounds like you had some pull forward specifically from the 3Q. Are there specific kind of nuances we should be thinking about? Can you talk to the consensus if you need to. It sounds like we should be thinking about a, maybe a lower than normal pre-Q performance or growth rate. Comp adjusted, the 4Q is similar to where you thought you’d land. Yeah.

Unidentified Speaker: Good morning Richard, and thanks for the question. Let me add a little bit of color on first half, second half, and then come back to your 3Q specific question. Let me maybe start with your bigger picture question about guidance. Our guidance at midpoint has not changed. We kind of narrowed the range a little bit given where we are in the year. Our midpoint we believe is appropriate at $1,863 million, which is 8.5%. If you break it down in the first half, second half, the first half growth was 9%. We’re projecting the second half to be 8%. We also said that that’s going to be roughly equal growth in each of 3Q and 4Q. That kind of points to about 8% for 3Q and 4Q. Other than the little variation that I talked about, that’s just a normal part of our business.

We have generally good visibility to demand. We continue to maintain a backlog that’s been relatively steady. It’s still in the $700 million range. That gives us really, really good visibility for the rest of the year, which is why again, I keep coming back to the 8.5% and $1,863 million, which we believe is the appropriate place.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: On the cables to the bottom line that you were asking about, this is Diron, by the way. On our AOI specifically, we’ve delivered up about 14% in the first half at midpoint for the full year. That would suggest 14% as well. We see the second half growth on AOI being very similar to the first half growth. When you look at that on a quarter by quarter basis, we shared in the earnings presentation that we expect our AOI as a percent of sales to grow each quarter, to get a little bit better in third quarter and get a little bit better in fourth quarter to deliver on the full year, which again, at midpoint, if you were to pick that and use that as a reference, that would be at a 17.4% of sales.

We see the AOI cadence as being a gradual improvement quarter to quarter, both on a margin basis as well as on a nominal dollars of AOI basis. That’s helpful. Just to make it even simpler, we all have 3Q and 4Q estimates. There’s a consensus out there. All else equal, if we were to take $10 million out of the back half and put it into 2Q, would you have us take 5 and 5 from each of the 3Q and the 4Q, or do you take most of it from the 3Q and leave 4Q? How would you have us do that?

Unidentified Speaker: Yeah, I think when you look at it.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: The sales guidance, if you kind of reference what we had on the presentation specifically, we’ve shared that we expect the year-over-year growth in 3Q and 4Q to be very similar. At the midpoint, that would suggest a second half growth of around 8%. The third quarter and fourth quarter sales cadence would be very similar at the 8% for both 3Q and 4Q year-over-year at the midpoint. Okay, so roughly 5 and 5 in each quarter. Thank you.

Tina, Conference Operator: Your next question comes from the line of Matthew O’Brien with Piper Sandler. Please go ahead.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Good morning. Thanks for taking the questions. I don’t really want to beat this dead horse too much on the top end of the guide, but I’m going to because the stock’s down a little bit this morning and I think it’s primarily related to that. You did take the top end of the guide down by 100 basis points on a reported basis. I’m not sure if I heard from Diron if it’s currency related that that’s coming down, but given that that’s coming down with things kind of decelerating a little bit on the stack to year basis during the back half of the year, it just makes, I think, everybody wonder if there’s something going on from a, you know, just from a product perspective, especially in cardio and vascular, which has been well above the corporate average for a while.

Is that something specifically that you’re calling out here or we should interpret, or no, there’s not much to really be that concerned about. Again, the top end of the guide did come down by about 100 basis points on a reported basis.

Unidentified Speaker: Yeah. Good morning, Matt. Let me maybe answer a couple of the questions that you asked. This is not currency related and the guidance and the ranges that we talk about are reported on a reported basis. Let me also just talk about your comments in general. We narrowed the range just given where we are. Our midpoint continues to be the same. A few things to think about. As you mentioned, the deceleration I think you talked about in the second half. That’s kind of going from 9% in the first half to 8% the second half. Let me point out just 4Q last year, our growth in 4Q. If you take the sales of our fourth quarter last year, it was 7% higher than the average of the first three quarters. It was a very, very strong quarter at 11% growth.

We’re bumping against that a little bit in the second half. There’s an element of the comp that is there that I think we want to recognize and that we had taken into account when we had given our guidance. There are other elements. Another element to think about is that the new Ross facility that I had mentioned earlier, we started increasing our demand from that facility in the middle of last year just because that’s when the capacity came online. Now we’re butting against the anniversary of that as we go into 3Q. There’s an element of comps that are a little bit different. Coming back to the year, our guidance midpoint of guidance has not changed. We just narrowed the range, just given the good visibility that we have for the year.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Got it. Just related question, you mentioned PFA and being associated with that category on multiple levels. There was a pretty favorable reimbursement update within the hypertension space with the renal denervation recently. Is that a category where you have experience exposure and could potentially be another driver as we head into 2026 and 2027? Thank you.

Unidentified Speaker: Yeah, great question. RDN. Look, it’s a great technology. A lot of people have been working on it for a number of years. We think, we believe it’s got the potential to be a very good, viable technology that would help patients, and we believe the technology is closer to commercialization. You talked about some of the reimbursement, NCDs and whatnot. Yeah, as a whole, it’s a very small market today, obviously because it’s an emerging market, and the capabilities that we have in electrophysiology are very transportable to RDN and we have exposure to it. That exposure is small today just because the market’s very small. We believe that as the market grows in the coming years, as you talked about, that can give us some tailwind as well.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Great. Thanks so much.

Tina, Conference Operator: Your next question comes from the line of Andrew Cooper with Raymond James. Please go ahead.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Hey, everybody. Good morning. Thanks for the time. Maybe just first a little bit different of a tariff question. Just want to kind of hear the latest, understand the minimal direct impact. Has there been any change in your conversations with your customers, given they likely are facing a little bit more of that headwind on trying to pass it through? As you’re talking about extending contracts or extending partnerships, has there been any change from their tone that you would kind of link to tariffs?

Unidentified Speaker: Good morning. Good morning, Andrew. Thanks for the question. I think first let me just talk about the fact that, as we mentioned before, the exposure that we have to tariffs is minimal, as you pointed out. You talked about whether our customers are talking to us about that. No, we are, as our customers, we are trying to minimize the impact of tariffs while staying fully compliant, of course, with all the rules. I think a lot of the engagement that we have with our customers is around that. We’ve talked about some of the logistical changes. As an example, if a product is built in Mexico, where in the past it entered the U.S. only to leave the U.S. to go to some international location, we can direct ship those and whatnot. There has been a lot of that type of discussion in terms of logistics.

I would also remind us that about 70% of the business that we have is on the contract. We have very defined, if you will, terms as it relates to that. We continue to work very collaboratively with our customers to make sure that we can minimize their impact to the extent possible.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Okay, that’s helpful. Maybe just one more on PFA, a little bit different of an angle here. I know kind of why you can’t and won’t give too much specific on too specific of a customer. Can you help frame if we look across that PFA landscape that we think is likely to get, or be getting a little bit more competitive, how much variability is there in the amount of content you have on one player’s catheter versus another? Or kind of in another wording, how many dollars might you see on your most penetrated catheter relative to maybe another player where you have less content and less part of that bill of materials?

Unidentified Speaker: All right, Andrew, thank you for starting your question. I know that you can’t divulge specifics because I can’t.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: You don’t have to give us names.

Unidentified Speaker: Our customers would not be thrilled with me if I started just, you know, mentioning what we do for them. Let me do this. Let me talk about in a broader sense and broader terms. Look, because of our presence and capabilities that we’ve had for many, many years in the electrophysiology space, and because of the investments that we’ve made and the focus that we’ve had to build even more capabilities in the past seven, eight years, we have a lot of presence in electrophysiology with the leading players in the market. We have exposure to PFA in a broad sense. I keep bringing us back to it is just what is really driving the growth, obviously, and the excitement is a technology itself because it’s safer, it’s better for the patient. There are a lot of other products that we manufacture that are really driven by that momentum.

Those are some of the products that we have had, guide wires, access sheaths that I’ve talked about. That is just part of the breadth of the portfolio that we have. That growth is really across the procedure, but specific to PFA. We have good exposure to this technology with the leading players, whether it’s complex components or subassemblies or in some cases finished devices.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Great, I’ll stop there. Thank you.

Unidentified Speaker: Thank you.

Tina, Conference Operator: Your final question comes from the line of Siraj Talia with Oppenheimer and Company. Please go ahead.

Unidentified Speaker: Morning payment.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Diron, I hope you’re well. One question for you, one for Payman. Let me come at this revenue pull through from a different angle. Like 70% of your contracts are long term, right? So what percentage of your contracts are coming up for renewal, and how flexible, let me rephrase, is the flexibility in these contracts for end customer deliverables changing as your customers try to manage top line margins in the customer environment? I know a long question, hopefully it made sense.

Unidentified Speaker: Yeah, no problem. I think it’s a good question, Siraj, thanks for asking it. Let me kind of break it into two because one element of it is the contracts themselves and the nature of them. These contracts are multi year and they don’t all start and end at the same time obviously.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Right.

Unidentified Speaker: There’s always an overlap. We have some contracts that we signed last year that are good for three to five years, and some contracts that are coming to expiration, but on average it’s been kind of that rolling 70% that’s on the contract. These contracts obviously define terms, commercial terms, and whatnot to kind of.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Help both.

Unidentified Speaker: Protect both companies, but also kind of define the rules of engagement, if you will. A lot of things are covered in that. We obviously want to make sure that we protect ourselves right in terms of the terms of the contract as it relates to some commercial terms, price and whatnot. There are elements, I think what you’re alluding to is the operational element of it. Yeah, of course there are some elements that define, you know, what forecast and inventory and whatnot should do and those obviously vary. Generally speaking, I think what’s implied in your question is also maybe a little bit of a variability in the forecast. These contracts nor most contracts that exist anywhere in any industry really don’t define a very specific multi-year forecast and take or pay.

Our customers obviously do not have certainty in the demand of the products nor would they want to put themselves in a position that they have to very clearly define, you know, what those products would be. Now what we do just to make sure that we’re running our operations efficiently, we have requirements from our customers and our customers usually give it to us anyway just to make sure that we are prepared, a visibility, I would say within 12 months. They give us 12 months forecast in advance. As you kind of think about months six to 12, that forecast can have a little bit more variability to it. That’s just by nature and as you get closer, it’s a little bit tighter.

That one to three month forecast I would say is the tightest because that’s where manufacturing plans are in place and where production plans are in place. There’s little variability there. By little I mean, you know, usually there’s not a drastic change. I mean there’s that few million dollar give or take that I talked about. Generally speaking we have good visibility to our demand and the $700 million backlog that we keep talking about is, I think about it as order books, as an order book, that those are the orders that we have on our books that specifically say what customer, what SKU, what month of shipment. That gives us that good visibility a few quarters ahead.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Fair enough. Diron, to the $700 million backlog, right? I’m not sure, maybe I missed it.

Unidentified Speaker: How should we think about the backlog?

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Over what duration is this numerator being considered? Also, Diron, are these contractual price volume-based calculations of $700 million, or have you also factored in, you know, FX is all over the map nowadays? Given your depth and breadth of customers, maybe if you could just tie.

Unidentified Speaker: That together and help us understand.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Trend in backlog and how sacrosanct is the $700 million number. Gentlemen, thank you for taking my questions. Yeah, thank you, Siraj. Yeah, so the $700 million is similar to kind of how Penguin was sharing. You need to think about that $700 million as firm orders from our customers, where there’s specific SKUs, specific quantities, specific deliverable delivery requests and promises. That’s really the order book that we have at this time. At the end of the year it was about $730 million. We’re in that same neighborhood today. There is variability in terms of what time period that is for. The vast majority of that $700 million is going to be related to the next two quarters. There are some orders in there that may be three or four quarters out.

We even have some orders that will trickle into five quarters out, et cetera, just based on the need. As we’ve shared before, when it comes to things like new product launches, we ask for more firm orders a little bit longer out so that we can best plan the manufacturing ramp to make sure we’re aligned with our customer demand. Whereas for other normal flow products, we might only have a couple quarters worth of orders on hand. That’s how you can think about, I guess call it the age of the orders or kind of how far out to look from a horizon standpoint. As far as the orders, again, with 70% of the business under contract, the vast majority of that is under some sort of pricing agreement. When there are pricing tiers, we reflect those orders at the appropriate pricing tier.

I will assure you that it does incorporate FX. It’s also important to note that almost all of our sales are U.S. dollar based sales. We have very, very few sales that are denominated in the currency other than U.S. dollars. There is not much FX fluctuation that we see in our sales performance nor on the order book specifically. Appreciate it. Yeah.

Unidentified Speaker: Thank you.

Tina, Conference Operator: I will now turn the call back over to Sanjiv for closing remarks.

Unidentified Speaker: Thank you everyone for joining today’s call.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: You can access the replay of this.

Unidentified Speaker: Call as well as the presentation on.

Sanjiv Arora, Senior Vice President, Strategy, Business Development, Investor Relations, Integer Holdings Corporation: Our investor website at Integer.net, thank you for your interest in Integer. This concludes today’s call.

Tina, Conference Operator: Thank you again for joining us today. This does conclude today’s conference call. You may now disconnect.

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