Teleflex narrows 2025 EPS guidance and shifts NewCo sale to priority, while lowering balloon pump outlook

Earnings Call Insights: Teleflex Incorporated (TFX) Q3 2025

MANAGEMENT VIEW

* CEO Liam Kelly stated the company is “continuing to take decisive action to unlock value within our business,” highlighting the separation into RemainCo and NewCo as a major strategic move. Kelly explained, “our Board and management have been continuing to actively advance the process for a potential sale of NewCo, which is now our priority.” He said there is “healthy interest in NewCo” and described the sale process as progressing with “momentum and stage in the process.”
* Kelly emphasized that, once separated, each business will be “best positioned for the future with more focused strategic direction, simplified operating models, streamlined manufacturing footprint and individually tailored capital allocation strategies.”
* Kelly provided an update on Italian payback legislation, noting a $23.7 million reserve decrease and a $20.1 million related revenue increase for EMEA, with $20.1 million pertaining to prior periods. He clarified, “we have excluded a $20.1 million increase in revenue related to the prior years from adjusted third quarter 2025 revenue.”
* Third quarter revenues were $913 million (GAAP), up 19.4% year-over-year. Adjusted revenues (excluding the Italian payback) were $892.9 million, up 16.8%. Adjusted EPS for the quarter was $3.67, up 5.2% year-over-year.
* Kelly noted the Vascular Intervention business “modestly ahead” of the $99 million expectation and confirmed confidence in the $204 million second-half revenue target for this segment. However, he announced lowered 2025 global balloon pump revenue expectations by $30 million at the midpoint, citing slower order rates in the U.S. “Although we had anticipated this dynamic in 2026, it has occurred sooner than expected.”
* The company launched Barrigel in Japan, describing this as “a significant milestone in the global expansion of Barrigel.”
* CFO John Deren said, “For the quarter, adjusted gross margin was 57.3%,” attributing a 350 basis point decline to tariffs, FX, product mix, and logistics costs. Deren reported, “adjusted operating margin was 23.3%,” a 400 basis point decrease year-over-year, and “adjusted net interest expense totaled $29.7 million.”

OUTLOOK

* The company now expects 2025 adjusted constant currency growth of 6.9% to 7.4%. Adjusted revenue growth guidance for 2025 is now 8% to 8.5%, down from the prior 8.5% to 9.5%, with a revenue dollar range of $3.305 billion to $3.320 billion. GAAP revenue growth is expected in the 9.1% to 9.6% range when including the Italian payback benefit for prior years.
* Teleflex expects adjusted gross margin for 2025 to be approximately 59% and adjusted operating margin to be approximately 24.5%. Adjusted EPS guidance for 2025 is narrowed to $14 to $14.20, from $13.90 to $14.30 previously.
* The company reduced its global balloon pump revenue expectations for 2025 by $30 million at the midpoint, with most of the reduction in the U.S.

FINANCIAL RESULTS

* Teleflex reported third quarter adjusted revenues of $892.9 million, a 16.8% year-over-year increase, and adjusted EPS of $3.67, a 5.2% increase.
* Americas revenue reached $555.9 million; EMEA revenue was $214.1 million; Asia revenue was $122.9 million. Vascular Access revenue was $191 million, Interventional revenue was $266.4 million, Anesthesia revenue was $101.4 million, and Surgical revenue was $122.9 million. Interventional Urology revenue was $71.8 million.
* Cash flow from operations for the first nine months was $189 million, compared to $435.6 million in the prior year, mainly due to working capital changes and acquisition-related payments.

Q&A

* Michael Matson, Needham: Asked about balloon pump dynamics in China. CEO Kelly explained a $9 million stocking order, driven by “government changes, which recommends the use of intra-aortic balloon pumps and catheters for complex PCI procedures,” and tariff-related timing. He said, “We expect this situation to normalize in Q4 as we sell through this inventory.”
* Matson asked about risks from drug-coated balloons. Kelly stated, “We're not seeing any impact” and noted that “drug-coated stents being used alongside them.”
* Matthew Taylor, Jefferies: Asked if the NewCo spin is off the table and about focus on sale. Kelly reiterated, “the level of interest and momentum we have for the sale of NewCo is now our priority.”
* Jayson Bedford, Raymond James: Queried revenue guidance for Q4 and margin impacts. CFO Deren said, “for the implied Q4 is [ $930 million to $945.6 million ] in dollars... about a $21 million FX tailwind.”
* Ravi Misra, Truist: Asked about interventional business growth and need for flagship products. Kelly replied, “we have a suite of new products coming into the portfolio... we will be driving investment into the business.”
* Samantha Munoz, Piper Sandler: Asked for sale process details. Kelly said, “we are focused on selling the entirety of NewCo... we are in the later stages of due diligence.”
* Munoz asked about balloon pump outlook. Kelly indicated, “catheters grew strong double digits in Q3” and expects catheter growth to continue for several years.
* Patrick Wood, Morgan Stanley: Inquired about BIOTRONIK integration. Kelly said, “retention has been rock solid. We haven't lost any of the senior leadership.”

SENTIMENT ANALYSIS

* Analysts’ tone was probing, focusing on NewCo sale, balloon pump outlook, and BIOTRONIK integration, signaling slightly negative sentiment about guidance reductions and restructuring but interest in strategic moves.
* Management’s prepared remarks were confident, but tone shifted to more defensive and explanatory in Q&A, especially around balloon pump sales and NewCo process. Kelly stated, “I am pleased with the progress that we have made and the stage that we are at in the separation.”
* Compared to the previous quarter, management’s confidence was steady during prepared remarks but more cautious in Q&A due to guidance reductions and earlier-than-expected balloon pump slowdown.

QUARTER-OVER-QUARTER COMPARISON

* The company shifted from a parallel sale/spin strategy for NewCo in Q2 to prioritizing a sale in Q3, reflecting increased buyer interest and advanced diligence.
* The 2025 adjusted revenue growth guidance was reduced from 8.5%-9.5% in Q2 to 8%-8.5% in Q3, and adjusted EPS guidance was narrowed. Management lowered balloon pump revenue assumptions by $30 million at the midpoint.
* Analysts’ focus shifted more heavily to the NewCo sale process and the implications of the revised balloon pump outlook, compared to broader operational and acquisition questions in Q2.
* Management’s tone was less buoyant than Q2, reflecting caution around revised guidance and segment-specific headwinds.

RISKS AND CONCERNS

* Management cited lower-than-expected balloon pump order rates in the U.S. as a driver for reducing guidance.
* The Italian payback measure adjustment was characterized as nonrecurring.
* Tariffs, FX, product mix, and logistics costs contributed to gross margin pressure. Deren reported progress on “tariff mitigation strategies” but highlighted ongoing impacts.
* Analysts raised concerns about competitive threats to stent and balloon businesses, NewCo deal timing and valuation, and the sustainability of interventional business growth.

FINAL TAKEAWAY

Teleflex management emphasized that decisive actions to separate the company and prioritize the sale of NewCo are advancing, with robust buyer interest and due diligence underway. The quarter saw solid execution in core franchises and ongoing integration of the Vascular Intervention acquisition, but guidance was reduced due to the earlier-than-expected slowdown in balloon pump demand. The company remains focused on maximizing shareholder value, operational execution, and strategic portfolio expansion while navigating margin pressures and market dynamics, with confidence in continued growth opportunities for RemainCo and ongoing cost control initiatives.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/tfx/earnings/transcripts]

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