Oct 21, 2026 earnings call — Cincinnati flood disrupts production; guidance updated
Q3 revenue was $411.2 million, and the Cincinnati flood reduced the full-year midpoint by approximately $30 million.
Revenue $0.4B (est $0.4B) · EPS $0.59 (est $0.56)
Key quotes
"We estimate that the disruption reduced the third quarter revenue by approximately $7 million, and we expect an additional revenue impact of approximately $15 million-$20 million in the fourth quarter."
"While there is some timing risk around the completion of these final activities, our expectation remains a December limited commercial launch."
"We also reduced leverage to 3.8 times, and subsequent to the end of the quarter, we successfully completed a debt refinancing."
Analyst Q&A 9
Tissue Reconstruction trends and 2027 growth
Q (Matt Taylor · Jefferies): Analyst asked about declines in UBM and Integra Skin and whether Tissue Reconstruction will grow in 2027.
A: Management said the Tissue Reconstruction weakness came from slower share recapture in Integra Skin and competitive pressure in UBM, not broad demand issues. They said PriMatrix is supporting recovery and commercial execution and education are priorities. They expect base Tissue Reconstruction to be flat in 2027, with SurgiMend driving growth for that portfolio segment.
"On Tissue Reconstruction, the primary headwind was slower share recapture in Integra Skin and in UBM, not a broad-based demand or supply issue." — Stuart Essig (CEO·CHAIR)
2027 EPS outlook and ENT recovery
Q (Ryan Zimmerman · BTIG): Analyst asked if EPS can grow in 2027 given $24 million of extra interest and margin pressure, and also asked about the shape of the ENT business recovery.
A: Lea said they expect revenue growth in 2027 from portfolio recovery, SurgiMend relaunch, PriMatrix momentum and improved supply, but headwinds include the Cincinnati disruption, tariffs, measured Integra Skin and UBM growth, and $24 million incremental interest. She expects some EPS growth driven by annualized savings, lower remediation, productivity and discipline, but will give exact guidance in February. Stuart said ENT should return to growth beyond 2026 with AERA momentum, MicroFrance synergies, new products in 2027, and possible tuck-in acquisitions later.
"Our expectation is we'll see some growth in EPS, but beyond that, in terms of characterizing exactly how much, we'll save for our February conversation." — Lea Knight (CFO)
Deleveraging plan and Cincinnati recovery
Q (Elaine · Raymond James & Associates): Analyst asked how capital allocation will shift after reaching 3.5x leverage and what remediation steps and timeline are needed at Cincinnati; could recovery be faster or mitigate the $15–20 million impact.
A: Stuart said near-term priorities are improving execution, generating cash and deleveraging, and they will be modest on M&A until leverage is comfortably within 2.5–3.5x and operational recovery is confirmed. Lea said leverage is 3.8x and Q4 cash flow should bring them just outside the target range and position them to operate within it in 2027. On Cincinnati, management said the site is reoccupied, equipment is being repaired and validated, and they expect normal site operations to resume in Q2 2027 with no meaningful sales until Q3.
"At this point, I think we should stick with our guidance, which is second quarter recovery and no meaningful sales until we really move into the third quarter." — Stuart Essig (CEO·CHAIR)
Cincinnati revenue hit and neuro outlook
Q (Ravi Misra · Truist): Analyst asked for detail on the revenue pace of the rebound from Cincinnati disruption and how sustainable neuro growth is.
A: Lea said the Cincinnati disruption will affect Q1 2027 with shipments resuming in Q2 and the quarterly impact should be similar to Q4 2026, in the $15 million to $20 million range, with likely very limited revenue in Q2. Stuart said neuro recaptured share after shipping issues were resolved, international Specialty Surgery grew over 7%, and they see longer-term neuro growth in the low- to mid-single digits though Q3 outperformance may not repeat in Q4.
"The quarterly impact is expected to be similar to the impact that we framed for Q4 2026, so that $15 million to $20 million range." — Lea Knight (CFO)
Market health and hospital CapEx
Q (Alan · JPMorgan): Analyst asked about the health of the broader market and hospitals' appetite for capital spending.
A: Lea said market conditions are pretty stable across the business and many procedures are trauma or acute rather than purely elective; they continue to see a strong capital funnel and no near-term change. Stuart added capital is about 6% of revenue but CUSA coverage gains in cardiovascular and OBGYN open larger markets and they see upside for CUSA capital both in the U.S. and internationally.
"Across the board, we have seen pretty stable market conditions." — Lea Knight (CFO)
Cincinnati deferred revenue and MicroMatrix
Q (Ross Osborn · Wells Fargo): Analyst asked whether the $22–27 million of revenue is deferred or lost and what proportion will return, and whether MicroMatrix is losing share and its future in the portfolio.
A: Lea said for modeling they would not assume meaningful backorder clearance when shipments resume in Q2 2027 and they will resume shipping against current demand. Stuart said they will use a loaner pool, programs to have customers hold orders, and incentives to limit switching; MAYFIELD is core to surgeons and they expect to maintain a significant market position though they may lose some business. On MicroMatrix (UBM), Stuart said it remains part of the portfolio, is profitable and efficacious, but is under competitive pressure and they will use the commercial team to regain share.
"So for modeling purpose, we would not assume any meaningful back order clearance once we resume shipping in Q2 2027." — Lea Knight (CFO)
Integra Skin recovery and SurgiMend ramp
Q (Anthony · Citi): Analyst asked what must be done to re-capture Integra Skin SKUs and details on the SurgiMend breast reconstruction opportunity and sales force needs.
A: Stuart said burn accounts were won on price during supply gaps, so they must show clinical advantages and be competitive on price; PriMatrix can help reenter accounts more simply and then demonstrate Integra's strengths. For SurgiMend, he said the breast reconstruction market is large, they have an approvable PMA pending a pre-approval inspection at Braintree, and they will leverage and expand their sales force from about 30 to roughly 50 reps by end of 2027 who will carry SurgiMend and DuraSorb.
"We have plus or minus 30 salespeople, and we are planning to ramp that up to roughly 50 by the end of 2027, and they will carry both SurgiMend and DuraSorb." — Stuart Essig (CEO·CHAIR)
Gross-margin mix and loaner support
Q (Ray · BofA): Analyst asked what the 40 basis points of mix impact refers to and whether customers have enough inventory or are switching suppliers after the Cincinnati disruption.
A: Lea said gross margins are expected to be flat to 2025, down 60 basis points in total with 20 bps related to Cincinnati and the other 40 bps reflecting lower Tissue Reconstruction revenue which has higher gross margin and some manufacturing variances. Stuart said they continue to supply disposables but lack significant inventory of the reusable Mayfield head clamp, so they are making a large loaner pool more available, speeding turnaround, offering extended service contracts and incentives to customers to wait for product return, though they may lose some cases.
"What we are doing, as I mentioned earlier, is we have a large loaner pool that is used when a hospital has a repair to do, and we are making that loaner pool more available." — Stuart Essig (CEO·CHAIR)
Braintree/EU MDR costs and savings
Q (Vik Chopra · BMO): Analyst asked if Braintree and EU MDR costs have rolled off and whether additional cost savings remain in 2027 to offset mix and interest; also asked how much of the 20 bps Cincinnati margin hit carries into H1 2027.
A: Lea said Braintree costs have fallen significantly but a tail will remain in 2027 due to some idle ramp; EU MDR is about 90% complete with a quarterly tail of about $2 million continuing into 2027. On cost savings, she said annualization of transformation will deliver an incremental $10 million-$15 million in 2027 and lower remediation and consulting spend plus productivity gains will help mitigate headwinds; any Cincinnati lost revenue hits gross margin and will be offset in other income as insurance recoveries are recorded over time.
"So that's going to get us an incremental $10 million-$15 million in 2027." — Lea Knight (CFO)