All right. Welcome back to day two of the KBCM Healthcare Forum. My name is Brett Fishbein, Senior MedTech Analyst, and I'm pleased to be joined today by Integer Holdings, represented by Payman Khales, CEO, Diron Smith, CFO, and Kristen Stewart, Investor Relations. It's gonna be a 100% Q&A session. If you have questions, please feel free to submit them below the screen, and time permitting, I'll relay them to management. Maybe just to kick things off, you know, Payman, before we dive into just some of the other topics, wanted to ask you about the overall management transition. You've been in the CEO role for almost six months following a very long tenure running the C&V segment. I was hoping you could just, you know, update us on the transition, how it's gone so far, and then just how you're thinking about, you know, overall approach to the role at this point. Yeah. Good morning. Thank you, Brett. Good morning to you and everybody else on the webcast here. As you mentioned, I've been with Integer for quite some time. I love our company, the space, and what we do for our customers and our patients. The transition has gone very smoothly and I continue to be very excited about what lies ahead of us. We have a very strong foundation and strategy that we've been building on and we've been executing. I mentioned during our fourth quarter earnings, as we have done in the past, we continue to evolve and refine our strategy. We've done that. We've refined our three focus areas in terms of customer, making sure that we have even more focus on our customer success, even more focus on operational excellence, and continue to build talent within the company. Just an iteration and evolution of the prior focus areas that we've had. Overall, our strategy continues to be the same, to build critical capabilities for our customers so that we can help them bring the next generation devices and the novel therapies into market as quickly and as efficiently as they can. By doing that we can continue to build a pipeline of opportunities for us that continues to drive our growth. All right. Perfect. M aybe before we get into some of, like, the guidance topics, was hoping you can maybe just briefly comment on some of the announcements recently, as it pertains to the board of directors. Al so some of the activist involvement that we've seen, in recent months. Sure. As you saw by our press release and 8-K filing last week, following a very good constructive engagement with Irenic Capital Management, we reached a cooperation agreement. As part of this cooperation agreement, there's a standstill, but we also have two board members that have joined us as part of our normal board refreshment process. W e continue to refresh our board. Even before these appointments, five of our board members had joined us in the past five years. With these two new appointments, now that's gonna be seven. A s part of that process we had already been working on our corporate governance and nominating committee had already been working on continuing to refresh. As part of our dialogue and discussions with Irenic Capital Management, they nominated a board member that through our process, we looked at, we vetted and whatnot. We're glad that both Jim and Aaron have joined our board. We will benefit from their expertise. As part of this agreement, two of our board members will now stand for re-election again as part of the regular refreshment so that our board size stays the same. Our strategy, operational strategy, execution of our strategy has not changed. We look forward to benefiting from the experiences and views and perspective of these two new board members. All right. Perfect. Let's shift a little bit to 2026, and the guidance. I think anyone following the story, you know, had become very accustomed to a very steady revenue growth profile for Integer and maybe folks who are a little bit newer, maybe wondering kind of what's going on. It seems like 2026 is obviously more of a transition year. I was hoping you could just refresh the audience on kind of what's going on this year and maybe a little bit more about the nature of the product-specific headwinds that are included in the guidance for this year. Just as like a little bit of a follow-up, how people can get comfortable that these are one-off events more than something, like, more structural with the company. Sure. As you pointed out through the execution of our strategy, we've delivered results and delivered value for our shareholders. In October of last year, we mentioned that three products that have had strong ramps in 2025 have not had the rate of adoption that we and our customers had expected. As a result, we will have headwinds in 2026 as a result of the sizable decline of these products in 2026. Let me start by saying that the headwinds are limited and isolated to these three new products. In fact, if you take the impact of these products from 2026, our underlying business continues to perform well within the 4%-6% of our market. Now going specific to these three products, there hasn't been any change in terms of our supply arrangement, competitive losses, customers insourcing. The supply arrangement that we have with our customers has not changed in any shape or form. We are still the supplier of these products. It's just that the products have not had as much adoption as you know we both had hoped. We expect this to be temporary. We expect that as we go through the course of 2026, we have some more difficult comps in the first half of the year, in particular. As we go through the second half of the year, we expect to get to market growth, and, given the strong pipeline that we have and the strength of our underlying business, we expect to get to 200 basis points over market in 2027. All right, great. J ust as a follow-up, can you just help and maybe remind or maybe inform just how you think about those three products as a percentage of Integer's revenue for 2025, and then what that implies for 2026 baking in the expected headwind? In 2025, these products collectively, the three of them, contributed just under 6% of our total revenues. We have mentioned in the past, and I'll remind the audience that, because of the diversity and diversification of our portfolio, we don't have any single program that makes up more than a few low single-digit points of our total revenues. Even though these products were relatively large in size, collectively, they were still 6% of our revenues in 2026, give or take. We expect that to be substantially less in 2026. We have a headwind for these three products that is in the 300-400 basis points. If you do the math, what remains is relatively small. At the low end of our outlook, the revenue of these three products in 2026 would be below 2% of our total sales in our guidance. All right, perfect. M aybe just putting those areas aside that you talk about, you know, kind of a 4%-6% expectation for the rest of the portfolio. Was hoping you could just talk a little bit about, like, where you're seeing strength in just across the different business areas that you're involved with. Like, where are you seeing performance above that range, like, that are supporting the 4%-6% growth profile for the rest of the business? Yeah, sure. The 4%-6% is a weighted average growth rate of our market. That's a collection of, excuse me, what we have in our markets. This is obviously made of products that we have in the faster-growing markets. As we execute our strategy and launch more products in the faster-growing markets. We expect that over time, that mix to continue to shift, that weighted average to continue to grow. We are in that 4%-6% range and we have faster-growing segments of our business. Obviously those products that are in the faster-growing markets like neurovascular, structural heart, electrophysiology and neuromodulation. Even within some of the slower-growing markets, for example, within CRM, there are parts of it that grow faster. Collectively these are some of the things, these faster-growing products. The products in the faster-growing markets are what contributing to our growth rate and that we expected over time as we execute our strategy that will continue to drive our performance. Also wanted to just ask on the guidance about seasonality, 'cause you gave some color on just, like, how you think the year will play out. I got some questions just about kind of like what it implies for the second half of the year. I was hoping you could just unpack that a little bit more specifically around the implied 4Q growth rate, which seems to be, you know, you're talking about a return to market growth, but you also have a calendar headwind. I wanna understand if that implies like an underlying growth rate that's above the market growth level and in 4Q accounting for like some of the calendar, timing impacts. Yeah. We don't really have seasonality within our business. Our forecast is in alignment with what our customers plan for their manufacturing facilities. We don't really have seasonality per se. T he variation that might exist is just normal variations that might exist within the quarters, not really tied to a seasonality. Now, in terms of the cadence, if you will, you know, consistent with what we provided from a preliminary outlook perspective last October, we continue to expect that the first half organic is gonna be down low single digits and expect to return to market during the second half of 2026. The primary reason behind that is because of the comps, the more difficult comps that we have in the first half of 2025. We had very strong growth of these products. We don't have that in 2026, so that gives us more difficult comps. As we go through the year, the third and fourth quarter, these comps get easier sequentially. That's what we expect to get us to market performance in the second half of 2026. If you take the impact again of these products, these three products out of our overall performance, both in the first half and the second half, we expect our underlying business to grow at the market rate of 4%-6%. We haven't provided an explicit outlook on the fourth quarter. We've talked about the first and second half cadence, which I'm highlighting here. Is just to clarify, is the general message for the second half of the year, like when you talk about return to market growth, like just like in terms of like how you talk about the calendar headwind for 4Q, is that kind of baked into the market growth expectation? Yeah, it considers you know, a number of factors. The visibility that we have in terms of the forecast that we have from our customers, how we've risk-adjusted that based on what we see, the order book that we have, which is what's in our backlog. We've said that our backlog has remained right around $700 million you know, during the course of last year. That's an order book. It's a combination of these things that has been the basis of our guidance, which is a balanced view of what we think the range of outcomes would be. All right. Perfect. Let's talk a little bit about 2027, which seems like very far away at this point, but you have started to talk about a return to above-market growth next year. Just wanted to ask, like, a little bit more about that, like how you think about bridging the gap from 4%-6% growth ex the product headwinds to something closer to 6%-8% potentially by 2027, and how you think about, like, new products, and how they could contribute as we progress to, like, into next year. Yeah. What drives the above-market performance, the 200 basis above-market performance, is the new product launches. That's what's been driving our performance in the past, and that's what we expect to be driving in the future. The strength of our pipeline is what gives us confidence about that. Now coming back very specifically to your question, we expect that the 2026 headwinds to be temporary in nature, that once we weather through the next few quarters, that once we weather the comps, that our underlying business is expected to grow at the market rate in 2027, which is 4%-6%. You add to that the new product launches that are planned and scheduled both in the second half of 2026 as well as during the course of 2027, that then give us confidence about our ability to get to 200 basis points over market in 2027. All right. Perfect. Then maybe kind of putting a bow on the whole guidance discussion, just thinking about, you know, the margin story and a little bit of a step down implied in the first quarter, as you absorb some of the product headwinds, and then really like a nice progression through the year implied. Maybe just a little bit more color on, like, some of the drivers that you think support that ramp as we progress from 1Q to 4Q 2026. You know, like, we're kind of estimating something into the mid- to high-teens% operating margin by the end of the year. Yeah. Brett, what I would kind of point to is what we've shared in terms of our disciplined cost management during this period of flattish sales, coupled with growing revenue throughout the year. As we shared kind of on a quarterly cadence, we expect the nominal sales to grow throughout the year. The pressure we're seeing in the first quarter, the 250 basis points of pressure on our operating margin, is really driven from fixed cost deleveraging with that infrastructure that we have to support a higher sales growth, as well as a bit of inefficiency on our direct labor workforce. 'Cause as you can imagine, we wanna make sure that we have the right labor in place to support the outer quarters as well, and it takes a while to train associates to be able to deliver on the complex manufacturing that we have. In the first quarter, we're seeing some outsized pressure, that as we navigate throughout the year and maintain our disciplined cost management with the increase in nominal sales. We expect to be able to then leverage that fixed cost throughout the rest of the year and see the margin expand sequentially quarter to quarter and show real nice improvement. We are continuing to invest in our Integer Production System, so that has not stopped. That's a critical component of our manufacturing, you know, priorities. We continue to expect to drive variable cost improvements as we navigate throughout the year as well. All right. Perfect. Diron, I also just wanted to ask, you know, since you've guided and had the earnings call, there's just been a pretty significant change in level of volatility with some of the input costs, like oil and commodity prices. Wanted to just get your thoughts on that and the potential impact to Integer if this situation became very prolonged, maybe like how much exposure you see and then maybe like flexibility with some of your contracts to pass on those type of cost changes. Sure. When you kind of start maybe just with the action going on in the Middle East right now, I think there's a couple elements to look at. One, we do not have manufacturing footprint or associates based in the Middle East. So that's one piece of the equation. When you look at the overall, you know, sales that even some of the larger OEMs have talked about, their sales into the Middle East, we don't believe that would be a material impact either. Then you get to more of the cost structure, right? So some of the inflation potential pressure there. When we look at that and we do our evaluation, we believe that the impact is fairly immaterial, and for a couple of reasons. One, a large portion of our supply base is based in the U.S., so that's one element. Additionally, as you look at the overall cost profile in certain areas of the supply chain, we have price protections with our customers, or with our suppliers, excuse me. Then also as we think about, we have opportunities in a number of our contracts to when the impacts are outsized, we can work with our customers to either pass on the inflation or potentially renegotiate some of our pricing as well. Then lastly, about 30% of our business is not under any sort of long-term agreement as well, which gives us much more flexibility to pass on any sort of inflation there. Right now, based on our best view of the potential, we see it as being a fairly immaterial impact and within our guidance ranges. Perfect. Just on the margin topic, you know, 2026 we've talked about already. It's a different type of year. In the past, Integer had pretty aggressive targets in terms of operating margin leverage and operating income growth. I wanted to ask as you think, like, longer term, assuming the revenue story goes as expected next year, you return to above-market growth, if you still think of growing operating income at two times the rate of sales growth as, like, the right long-term target for the company? Yeah. Look, our strategic objectives, financial objectives have not changed. In fact, we shared those again in our February call, and that is to grow sales 200 basis points above the market to grow our operating income at twice the rate of sales growth and to maintain a disciplined debt leverage within the 2.5-3.5. Those strategic financial objectives have not changed. We have not given a specific guidance for 2027 in terms of profit. We would typically do that in our February earnings call, February of 2027 earnings call when we would typically provide that more explicit guidance. I can say that our strategic financial objectives have not changed, and we still continue to expect to expand margins and grow operating income at twice the rate of sales. That would be our objective. All right, great. I'm gonna shift a little bit and ask a few questions on the portfolio and some of your growth markets. You know, we obviously still get a lot of questions about EP just given some of the excitement in the space. Again, I wanna keep this, you know, a little bit more long-term in nature, but just curious how you think about your positioning on a longer term basis in that market. You know, if you think you're still positioned to grow relatively in line with the market, thinking ahead once you lap those two product headwinds that are in the EP category. Yeah. We are well-positioned in the EP market. That portfolio has done quite well. We've built a lot of capabilities in that space for a number of years, and we have a broad portfolio. I would remind us that our exposure is across the EP procedures, not only the ablation part in terms of access, navigation, mapping, diagnostics, as well as the ablation device, the different technologies that are available. So as that market has been quite vibrant and procedures have done well, that has been giving us tailwinds, and we've done well there. We continue to work with the leading OEMs and have a strong pipeline of products that are expected to launch in the coming years that would then complement our already strong portfolio. Just maybe specific to the two EP products that are giving us headwinds, as you alluded to, Brett Fishbein, if you take the impact of those products out of our EP numbers in 2026, the rest of our portfolio is expected to still perform very well in 2026. All right. Perfect. Just wondering it's a category that you've invested in, really ahead of, I think, this massive growth wave, so you positioned yourself to participate in that for years. Just wondering, like from an acquisition standpoint, if you still see any gaps in the portfolio in just thinking about some of, like, the new product launches in EP, and just where everything is moving, or if you think the vertical integration efforts are largely complete at this point. Well, I don't think our capability and technology build will ever be complete because obviously we wanna continue to expand, but also technology isn't static. A s time goes by, I mean, the more novel and better ways of doing things. We continue to invest both organically and inorganically to make sure that we retain a competitive advantage and be able to deliver more value to our customers. That effort will continue. As part of our strategic roadmap, we continue to build and maintain and update a list of capabilities that we need to be successful in our key markets, not only in EP, but all of our key markets. We then make a decision as to which one of those capabilities do we wanna build organically versus to go make an acquisition. That's what the latter is what drives our acquisition targets. Those two things continue to be very important elements of our strategy. As we build more capabilities, then we can be more vertically integrated and deliver more value to our customers and allow them to have even more of a one-stop shop, an entity that has very strong technical capabilities that can help them with the design and development all the way to scaled manufacturing, and to help them get products and novel therapies into market faster and more efficiently. I think, like, all those comments fit really into the long-term growth strategy. Y ears back as a company, you guys defined several target growth markets that you funneled most of your investment activity, to your point, organically and inorganically too. To remind people, Electrophysiology, structural heart, neurovascular, Neuromodulation are all markets that you think of as high single-digit to mid-teens type of end markets. I was just wondering, you know, we're several years into this strategy, directionally what proportion of your portfolio now sits in these faster growing categories, and, like, where do you see that going over time? We haven't shared the proportions of our individual sub-markets. We do break out sales by major product lines, which is Cardiovascular and Cardiac Rhythm Management & Neuromodulation, and Cardiovascular is about 60% of our sales. Cardiac Rhythm Management and Neuromodulation is about 36%, and the rest is in other markets. But that said, the mix of our sales in the higher markets has increased in recent years, obviously, as a result of our strategy as we launch new products in those into a faster-growing market. We continue to expect that mix will be favorable over time. Now, of the higher markets, higher growth markets that you mentioned, EP and neuromodulation are larger in size, and we've shared that structural heart and neurovascular are a smaller part of our portfolio, but we've been building capabilities to support these markets in recent years. A s an example through the acquisition of InNeuroCo in 2023, we substantially expanded our capabilities both for design development and manufacturing of neurovascular products. All right. Totally fair. Also wanna ask we're coming off of the 4Q call, and I like your 4Q calls because they're kind of like short investor days almost, where you give some more long-term strategic updates and you updated some of the metrics around product development sales talked about a 300% increase, and also gave an update on your PMA product portfolio. I believe it was $125 million in 2024. And you've talked about a 15%-20% CAGR in that group of products over the next three to five years. I was hoping you could just maybe update us, give a little more color on what's driving the performance around the very fast new product development sales and then that CAGR rate that you think about for the PMA portfolio. Sure. Let me start with the overall pipeline and the product development sales because the PMA piece that you talked about is a subset of that. Let me talk bigger picture. As you pointed out, our product development sales have continued to grow, and they've grown 300%. It's quadrupled effectively since 2017, which is the first data point that we had shared. Well, that's because of the capabilities that we have and continue to build, the relationships that we have continued to strengthen with our customers, and ultimately the execution that we have that gives us trust to our customers that they can rely on Integer to be the partner of choice for the design development of their next generation product. You can correlate our product development sales, because when we do design development of next generation products with our customers, we get compensated for that. As that revenue grows, you can correlate that to the size of our pipeline. Either there are more programs in it, those programs are more complex or larger, likely a combination of all the three. We believe that's a good leading indicator of the strength of our pipeline, and again, that's as a result of the execution of our strategy. Now, going specific to the emerging customers with PMA products, that's a subset of our pipeline, and it's really focused primarily on these customers that are emerging innovators that are primarily focused in the neuromodulation space. These are customers that we've been working on for many years because development cycles are long. We have about 40 customers in that grouping, if you will, with 11 of them now that have products that are in the market. That bucket, that group has that strong growth in recent years, you know, from $10 million, you know, circa 2018 to $125 million at the end of 2024. We expect that as, you know, we add customers, these customers have more products that are launching or new products that are launching. We expect that book of business to grow at 15%-20% CAGR in the next 3-5 years. All right. Perfect. One more update that was in the 4Q presentation. Now, there was a small section or slide about the capacity expansion projects. These have been underway for years, and it's interesting. There's like six little pictures of buildings in the slides, but I'm not really exactly like sure what they are and like what you've added. So maybe just tell us a little bit about some of the recent capacity expansion efforts, and if there's anything to call out in terms of the capabilities that you've really been investing in capacity. We have both a footprint strategy that drives our strategy in terms of where we need capacity and, you know, what specific capabilities we need in what facilities. You combine that with the long-range planning process that because of the visibility that we have in the growth of both our existing programs and the next generation products that are in our pipeline. We know where the products are gonna go and are expected to go and, you know, where we need to build capacity. Now, where we think about capacity, we first look at how do we get more out of our existing facilities utilizing the lean methodologies that we have in the Integer Production System. That's always the first place that we go look at to get efficiencies. We also have to make sure that we have physical capacity because we never wanna be constrained in terms of growth. We never wanna constrain our growth because of lack of physical capacity. Where we expand is all strategic. That's as a result of what we have visibility to in terms of future growth potential as well as what our footprint strategy is. Now, you talked about six thumbnails that were just a sampling, if you will, just for the real estate of the slide. I can talk about some of those. I mean, in recent years, we've talked about the fact that we built out, you know, some of our Irish facilities and a new facility in R&D and manufacturing facilities to be co-located with our customers that have strong presence there, as well as a guide wire facility that because of a growth needed expansion. Some of the pictures that we had on our slide were our Salem, Virginia facility where we do laser processing and micromachining, that we're expanding that. You know, another one was our Alden, New York facility, which supports our CRM&N implantable devices. These are just some examples of ongoing, but we have other expansion projects that are in the works that we've done over the years as a result of our long-range strategic planning process. Perfect. I'd love to talk more about that in the future, and definitely remember the two Ireland expansions that you guys did a couple years ago. Maybe just shifting gears again a little bit. I wanted to just ask, you know, CRM and neuromodulation, it's an interesting setup where you have, you know, the CRM space that as a whole is a little bit slower-growing. You know, there are faster-growing pockets within there. Then, like, the neuromodulation category has historically been a really nice growth area, diversified but, you know, generally healthy growth. I think there's been a couple pockets of neuromodulation where there has been, like, some temporary slowdowns in just procedural rates. I'm thinking about, like, sacral neuromod, hypoglossal neuromod, and there's, like, some company-specific stories. I just wanted to, like, maybe ask at a high level how you feel about neuromodulation market growth as a whole, and if you still see some, like, pockets that you're involved with that are, like, really driving, you know, what we've, like, typically seen to be, like, high single-digit growth as a whole in that space? Yeah. Let me quickly address what you talked about CRM. Yeah. The CRM market is a more mature market that we expect to be in the low single digit. Within it, there are areas that are growing faster, like Leadless Pacing, which is growing in double digits. We have mentioned in the past that we have exposure to Leadless Pacing. Again, within even within a more mature product portfolio, there are areas of faster growth. Now, specific to neuromodulation, we see neuromod as a high single-digit growth market. It's also a very wide range of different therapies and technologies that address a number of conditions. I mean, you highlighted, I guess, the sleep apnea that we see growth potential over the long term. There are a lot of other, you know, conditions that, you know, what we have in our pipeline will address. I mean, there's, you know, sacral nerve stimulation, there's, you know, tibial nerve stimulation devices that are used to treat incontinence. These we believe have strong growth potential. We also have some emergent technologies for pain, like peripheral nerve stimulation. You know, there's another market, you know, in the vagus nerve stimulation, which has been approved to treat, you know, a number of therapies, for example, epilepsy. We're not concentrated in neuromodulation in one specific condition. We have a broad range of exposure, which we believe is a driver of the high single-digit market growth that we've talked about. All right. Perfect. Perfect. Then just to kind of round out, like, the product-specific questions, I wanted to ask about a couple categories in our last couple minutes here. You know, renal denervation is a category that I've been getting more questions about, so I was hoping you could just touch on, like, kind of what you do in that space, and how you think about that as a potential growth opportunity. Renal denervation is something that we believe has potential in the long term. You will forgive me, Brett, for not being overly specific because I would indirectly share maybe potential customers and products that I can't do. We believe that over the long term, this therapy has potential and something that can be a tailwind to the industry and to Integer because we have exposure to it. It really fits well within the set of capabilities that we have. What we do in electrophysiology, which we have a lot of capabilities, is very directly transportable to the technologies that are used in RDN. We see this as a potential in the long term in terms of growth opportunities. All right. Perfect. I will get to my capital allocation and M&A questions next time, but we're running up on time here, so I wanted to thank you, Payman, Diron for participating. Thank you to everyone listening in, and if there's any final thoughts you wanted to leave the group with before we sign off, I'll pass it back to you. Yeah, no. I'm just gonna say, first of all, thanks again for having us on the call. It's great interacting with you, and thanks for the listeners on the call. I remain extremely excited about our strategic objectives and our execution and our potential for growth. We've demonstrated that we've delivered shareholder value. We have a few quarters of headwind that we expect to be temporary, and I'm excited to be working over the next quarters to kind of navigate through that to get to growth, to market growth in the second half of 2026 and to above market performance in 2027 and beyond. All right. Perfect. Thanks again, everybody. Have a great rest of the conference. Thank you.