Good day and thank you for standing by. Welcome to the Human Addicts Corporation first quarter 2027 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message device and your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. I would not like to hand the conference over to your speaker today. Olga Gayet, Vice President, Investor Relations and Treasurer, please go ahead.

Good morning, and thank you for joining us for Humanetics First Quarter Fiscal Year 2027 Conference School and Webcast. I'm joined today by Chris Simon, our CEO, and James Derecka, our CFO. This morning, we reported First Quarter Fiscal 2027 results and raised our Fiscal 2027 guidance. Our earnings release, supplemental presentation, and related materials are available in the Invest Relations section of our website. First quarter results are reported under the new reportable segment structure announced on June 5, 2026. Additional information, including historical recast financials and the presentation describing the changes, is also available on our Invest Relations website. Before we begin, I'd like to remind everyone that we will use both reported and organic revenue growth rates that exclude the impact of effects and the exit of liquid solutions. And our fiscal year 2027 guidance is also adjusted for the impact of the 53rd week. We'll refer to other non-GAAP financial measures to help investors understand human ethics ongoing business performance. Please note that these measures exclude certain charges and income items. A full list of excluded items, reconciliation thorough GAAP results, and comparisons with the prior year periods are provided in our earnings release. Our remarks today include forward-looking statements, and our actual results may differ materially from the anticipated results. Factors that may cause our results to differ include those referenced in the safe harbor statement in today's earnings release and in other SSE filings. We do not undertake any obligation to update these forward-looking statements. And with that, I'd like to turn the call over to Chris.

Good morning, everyone. Thank you for joining. We started FY27 strong, with broad-based execution driving another quarter of profitable growth. First quarter revenue was $339 million, increasing 6% reported and organic, while adjusted earnings per diluted share increased 4% to $1.14. Investments we have made to enhance our portfolio, improve our operating model, and strengthen commercial execution are fueling consistent growth and strong cash generation. All three of our core platforms contributed to our performance this quarter, demonstrating the breadth of our business and reinforcing the confidence in our ability to deliver sustainable long-term growth. Before discussing our business results, I'd like to welcome Dr. Martin Medeas to our board of directors. Martin has built a distinguished career leading global healthcare businesses through transformation, strengthening execution, and creating long-term value. His strategic perspective and operating experience will be invaluable as we continue executing our strategy, and we're delighted to welcome him to the board. Now, let's discuss our business results. Med-surg revenue increased 6% year-over-year reported and organic to $148 million, with growth across both franchises. Blood management technologies grew 8% organically, with double-digit growth in hemostasis and transfusion management, partially offset by slowing cell salvage to capital upgrades. Hemostasis management is the definition of durable growth, with mid-teens disposable growth in the quarter, driven by higher utilization across the installed base and continued share gains. The ongoing success of the HN cartridge underscores our ability to innovate, expand the clinical applications of visceral elastic testing, and further strengthen our leadership position, creating a longer runway for sustainable growth. Transfusion management also continued to build momentum with another quarter of strong software implementations. Faster customer activations are expanding our recurring revenue base and enhancing the durability of revenue growth for this franchise. Interventional technologies returned to growth, growing organically 3%. Vascular closure grew above market, increasing in the low double digits year over year and low single digits sequentially. Performance reflected contributions from all geographies, led by renewed momentum in the U.S. with Vascade MVP and MVP XL and electrophysiology, more than offsetting softness in peripheral and coronary procedures and esophageal cooling. Three factors are driving our vascular closure outperformance. First, the reacceleration of access site growth following the stabilization of PFA and atrial fibrillation procedures. Second, stronger commercial execution, resulting from the investments we've made in sales and And third, the momentum created by the Vascade MVP XL expanded indication up to 17 French in outer diameter. Higher utilization, account wins, and the expanded XL use case are driving broader adoption and positioning the franchise for resurgent growth. We continue to strengthen the clinical evidence in large-bore venous closure with the largest real-world study of Vascade MVP XL to date. The study, conducted at Emory University in more than 1,600 patients, demonstrated rapid hemostasis, greater than 92% same-day discharge, and an excellent safety profile in large-bore sheath procedures like TFA and LAAC. Together, the expanded indication and growing body of real-world clinical data further strengthen our competitive position and provide the foundation for broader physician adoption. MedSurge is reemerging as a driver of Hemanetix long-term growth. With two growth-oriented franchises supported by strong innovation, expanding adoption, and improving market fundamentals, Solid first-quarter performance reinforces our confidence in delivering mid-single-digit, mid-surg growth in fiscal 2027. Turning to apheresis, revenue grew 5% on a reported basis and 6% organic to $191 million. Plasma revenue grew 8% organic, reflecting double-digit growth in disposables globally, partially offset by a difficult prior-year software comparison. Growth was supported by share gains, strong plasma collection trends, and the rollout of Persona Plus. Collections among our U.S. customers increased in the high single to low double digits, including favorable ordering patterns, reinforcing continued IG demand, and strong market fundamentals. Persona Plus is delivering meaningful economic benefits to our customers and reinforcing the unique value proposition of our integrated plasma collection platform. Through a simple firmware upgrade, Persona Plus helps our customers increase plasma yield, improve center productivity, and lower cost per liter. The rollout is progressing ahead of schedule, and early adopters are achieving yield improvements in excess of 5% compared with our earlier Persona offerings. Other apheresis revenue declined 3% organic, reflecting portfolio optimization and order timing. Following a strong first quarter, we are raising our fiscal 2027 apheresis revenue guidance to low to mid single-digit growth. The increase reflects first quarter outperformance while our expectations for the rest of the year remain balanced and largely unchanged, supported by share gains, persona plus adoption, and modest market growth assumptions. Our first quarter performance reflects the strength of the overall business. Consistent execution across plasma, blood management technologies, and interventional technologies demonstrate that our growth is becoming increasingly durable. Accordingly, we are raising our full year reported revenue growth guidance to five to eight percent and organic growth guidance to 4% to 7%. We remain confident in our outlook while maintaining a disciplined approach to guidance for the rest of the year. James, over to you.

James C. Thank you, Chris, and good morning, everyone. Chris highlighted the continued strengthening of our business, and our financial results reflect that same story. Broader-based growth, improving revenue quality, favorable portfolio mix, and an earnings algorithm that continues to strengthen through disciplined execution. As our portfolio continues to shift toward higher margin recurring revenue and differentiated technologies, we're beginning to realize the operating leverage from the investments we've made over the past several years. First quarter gross margin was 60.4%, down 40 basis points from the prior year. The comparison was impacted by upfront software license revenue recognized in the first quarter of Fiscal 26, which benefited prior year gross margin by approximately 200 basis points. Excluding the software benefit, adjusted gross margin expanded, driven by favorable product mix, continued persona plus adoption, pricing actions, and strong commercial execution. Operating expenses increased 7% to $126 million, primarily reflecting higher personnel costs, including self-insured benefit plans, the VivaShore medical acquisition, and higher freight expense. Adjusted operating margin was 23.4%, down 70 basis points year over year, but expanded meaningfully after normalizing for the prior year software benefit. Sequentially, margin declined 100 basis points, primarily due to lower med-surg revenue following a strong fourth quarter and external cost pressures, partially offset by persona plus and disciplined execution. We remain confident in delivering 50 to 100 basis points of our adjusted operating margin expansion in fiscal 27. Seven, our outlook incorporates sustained external cost pressure, which we expect to more than offset through revenue growth, favorable mix, persona plus adoption, productivity, and tariff recovery. The adjusted tax rate was 25.7%, compared with 24.9% in the prior year period, primarily reflecting lower tax benefits associated with equity compensation. Adjusted earnings per diluted share increased 4% year-over-year to $1.14, reflecting strong underlying operating performance. Earnings growth was achieved despite higher interest expense, unfavorable foreign exchange and a higher tax rate, with those headwinds largely offset by the benefit of a lower diluted share count resulting from last year's share repurchases. Looking ahead, we expect adjusted earnings for diluted share to grow broadly in line with our increased reported revenue growth guidance for fiscal 27. Now turning to the balance sheet and cash flow. Strong earnings once again translated into strong cash generation, reinforcing both the quality of our earnings and the durability of our operating model. Over the last 12 months, our cash earnings exceeded our P&L earnings, with free cash flow conversion reaching 106% of adjusted net income. We believe this level of cash conversion reflects the strength of the business and provides the financial flexibility to invest behind our strategic priorities while continuing to strengthen the balance sheet. That strength was also evident in the first quarter. Operating cash flow was $52 million, approximately three times the prior year period, while free cash flow increased nearly 15-fold year-over-year. Free cash flow conversion reached 75% of adjusted net income, an exceptional result for what is typically our seasonally weakest net cash inflow quarter, driven by disciplined working capital execution and fewer device placements, partially offset by higher capital expenditures. Our capital allocation actions reflect that financial strength. During the quarter, we repaid $50 million of our revolving credit facility balance and end of the quarter with $223 million in cash and a net leverage ratio as defined in our credit agreement of approximately 2.69 times EBITDA. Subsequent to quarter end, we repaid an additional $50 million, reducing the outstanding revolver balance to $200 million as of today's call. We continue to prioritize disciplined deleveraging while maintaining ample capacity to invest in innovation, long-term growth, and opportunistic share buybacks. We are reaffirming our fiscal 2027 free cash flow conversion guidance of approximately 80% of adjusted debt income. While the first quarter cash generation exceeded our expectations, maintaining our full-year outlook reflects a disciplined approach in an evolving operating environment, and preserves flexibility to proactively manage inventory and working capital throughout the year. Before we open the line for questions, I'd like to leave you with three key takeaways from today's call. First, we continue to strengthen our portfolio. Persona Plus is extending our differentiation in plasma. Utilization and software share gains are enhancing the quality and durability of blood management technologies. And interventional technologies is now positioned to become a more meaningful contributor to long-term growth and profitability. Second, we remain confident in our fiscal 27 outlook. While we have increased both revenue and earnings guidance to reflect first quarter outperformance, our assumptions for the next three quarters remain balanced and largely unchanged, relying on continued execution and business momentum to further strengthen performance through the year. And finally, strong earnings and free cash flow provide flexibility to invest in growth, strengthen the balance sheet, and pursue disciplined capital allocation, including opportunistic share repurchases. Thank you for joining us this morning. Operator, please open the line for questions.

Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered or you assume of yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Anthony Patron with Mizuho Financial Group. Your line is open.

Thank you, and congrats on the strong print here. I hope everyone's doing well. Maybe Chris, Jim, one on IVT, and then I'll have one on plasma. Nice to see IVT coming back to growth here, organic growth, 2.5%. Gave some details there in your prepared remarks, Chris, but maybe a little bit more color on the dynamics of share shift. Two quarters ago, there was some dynamics from a private competitor plus a larger public competitor that has a consolidated approach. To what extent have you recaptured previously lost accounts? And what is the underlying attach rate to pulse field ablation for VASCATE as we enter August here? And then I'll have a follow-up on plasma.

Morning, Anthony. Yeah, that IVT return to growth in Q1 growing 3% organically, and that was most definitely led by low double-digit growth in vascular closure, which is what we've expected. I think overall it reflects a better market backdrop. We now see PFA at somewhere between 80% and 85% penetration. That's effectively stabilizing the access site growth rate for us. and we now think that growth rate is probably in the 6% to 7% range. We, of course, grew in excess of that. To your question, it's around driving greater utilization and additional share capture. When I called that out, I think there's really three things going on. A rising tide raises the whole category. That's the access site growth resuming and eventually regressing to whatever the AFib growth rate is, probably in the low to mid-teens. I think the second thing is our commercial execution. The investments we've made in sales and marketing, you know, that team is really beginning to hit their stride. And then I think, you know, the third thing is the MVP XL label expansion coupled with a growing body of real-world evidence has enabled us to both contract for and pull through that utilization. So that's helping gain share. It's helping us drive utilization. We're benefiting by both levers.

And then on Plasma, Persona Plus driving gains, you have two dynamics going on, ongoing share gains, but the underlying market, I guess, based on PPTA data, I think looks okay. So maybe, you know, to what extent was the first quarter number here, which was well ahead of expectations, driven specifically by Persona Plus upgrades? To what extent was there incremental share gain? And then just lastly, with CSL, is that completely out of there now? And is this like the first quarter of a clean number? Congratulations on the print.

Thanks again, Anthony. I'll start with the last piece of this. Yes, this is us finally outrunning any overhang. So both the divestiture and the customer loss, that $153 million is out. And so what you see from us is clean and recurring going forward. In terms of the first quarter, I think it reinforced the strength of plasma that we've been experiencing. Revenue was up 8%, despite what you know to be a really difficult software comparison from last year. North American disposables within that were up in the mid-20% range, and our European sales were double-digit as well. So really pleased with what we're seeing. It's a combination, as we've talked before, for sure, share gains, both prior share gains in the U.S. and new share gains globally, coupled with really robust collection volume and, yes, Persona Plus, the early stage of that rollout. When I think about Persona Plus, I guess what I would just highlight is that we're really pleased, and perhaps more importantly, customers are really pleased with what that's bringing to the market. adoption has accelerated, so it's importantly in contributing, but that'll become more meaningful as we go forward, and we've just tried to be really conservative about what we're forecasting, simply because if we don't have a signed contract and a committed timeline, we're going to hold off on putting that in. That's just discipline in our go-forward guidance.

One moment for our next question. Our next question comes from Alan Gong with J.P. Morgan. Your line is open.

Hi, team. Thanks for the question. I suppose I just had one on, you know, the margin performance in the quarter. So, you know, I think we saw gross margins, you know, excluding the comp, expanding nicely over last year. When we think about the out for the rest of the year, how should we think about the progression of gross margins?

Yeah, sure. Thanks, Alan. I'll address that. So Q1 operating margin came in right where we expected it to. And as you mentioned, we were lapping about a 200 basis point gross margin headwind from the $14 million software benefit that we had in the prior year. And we were able to offset that essentially, essentially all of it, through favorable mix and strong execution on the manufacturing side. Now, sequentially, margin was down from Q4. That's really a med-surg story. Q4 was an unusually strong quarter for BMT. So what you're seeing in Q1 is more of a leverage issue on lower revenue rather than anything really structural in the cost base. So as we move forward and we look at the rest of the year, the earnings algorithm that I mentioned in my opening remarks is pretty straightforward. SG&A should stay relatively stable in dollar terms. So as revenue builds, we should see better leverage flow through the P&L. You layer in the continued pricing from Persona Plus, like Chris mentioned, and other benefits and mix, and that should support sequential margin expansion as we move throughout the year. One thing I would like to flag on tariffs, so we will record about $7 million tariff refund in Q2, but I wouldn't read too much into that on a net basis. We expect that to be largely offset from headwinds, from higher oil prices, and transportation costs, and some material inflation later on in the year. So when you put it all together as we stand today, we feel good about reaffirming our full-year margin guidance, and we look forward to delivering on that.

Thanks. And then just a follow-up on IVT. So, vascular closure sounds like a really strong quarter, double-digit growth, really good to see that, you know, returning to growth. But on the flip side, that implies, you know, sensor-guided technologies had a bit of a more challenging quarter. Can you walk through what drove that and how we should think about, I guess, for both, you know, vascular closure and sensor-guided technologies, you know, how should we think about the growth outlook for the balance of the year in light of that and, you know, the reiterated mid-single-digit growth more broadly?

I'll work backwards against that, Alan. We've reiterated our mid-single growth for med-surg. Growth in the quarter was at the high end of that range, obviously at 6%. We're really confident, and candidly, first quarter was the most difficult comp across med-surg. So we like the momentum. We like where we're going from here, but it's one quarter, and it's our first quarter, and so we want to be appropriately prudent about that in terms of how we think about it. But we fully expect both BMT and IVT to contribute nicely to upside potential there. Within IVT, it is really a vascular closure story. That's the absolute top priority. Within GuideWires, we like that business. We're leaning into that business. We'll have more to say about that as the year progresses. we did see a 5% effect on the overall IVT, but we did see a bit of a backsliding on the OEM business. I think it's pretty clear what's going on there. So we'll work to address that as best we can, but I think the real opportunity is to drive that guidewire business into structural heart as an additional contributor. But first, second, and third will succeed on vascular closure.

One moment for our next question. Our next question comes from Marie Thiebalt with U.S. Bancorp BTIG. Your line is open.

Thanks for taking the questions and great quarter. Wanted to ask one quick one here on Plasma, and then I'll have a follow-up in IVT. In Plasma, you gave us some details of some of the drivers. Great to hear. I wanted to understand a little bit more how you're thinking about the timing of the Persona Plus rollout. I know you're in the midst of negotiations. Is this a potential tailwind for, say, the next 12 months, the next 18 months? What's kind of the timing of some of those conversations? And on the apheresis guidance increase, I think you described underlying plasma market growth as modest. I think the prior assumption was 0% to 2% volume growth. Can you just give us an update on the assumed underlying volume there in that guidance?

Great. Thanks, Marie. Yeah, in terms of Persona Plus, I'll put it in context. The Persona offering Plus is the second installment of that off-the-base gain, and it's roughly an additional 5% yield. We're seeing more than that in the market right now, the customers that are part of the early adoption, which is great. There's reasons for that. But this is an ongoing innovation cycle. There will be additional variants on Persona as we go forward. we'll have more to say about that when they're ready for market. But we think this is kind of a classic ongoing stage of rollouts. And we like where we are. We've tried to be prudent in what we've put into the forecast, so only what's been contracted, and we have a clear line of sight to the performance. The powerful thing to keep in mind about Persona Plus is this is a relatively straightforward software upgrade firmware in our offering. So we could change the centers rapidly. We'll go just as fast as our customers are prepared to go, but we are changing 30 or 40 centers a week without any kind of reluctance there. So we think that's great. In terms of how that factors in, the outlook for FY27 is really tied to factors that we can directly control. And that does imply upside to your question. There's the, you know, any kind of accelerated adoption on persona plus new contracts or faster rollout within the existing additional share gains, which can come in the form of us converting competitive centers or our customers taking share from their competitors, both of which have a direct benefit to us. And then thirdly, on collection volume, we began the year with this zero to 2% growth. We don't control it. We don't want to be dependent upon something we don't control. What you see in the raised guidance is essentially our first quarter outperformance added to essentially what we put forth for the rest of the year. So we have not changed the collection volume guidance at this point. We're still saying zero to two. It's obviously a lot more robust than that. We don't have any reason to believe that's not going to continue, but we don't want to be beholden to it.

Yeah, very good. Great detail. Thank you. A quick one on IVT then. You talked about Vascate MVP XL being a driver there. What are you seeing on the ground from the IDNs, ASCs on that? And secondly, has there been any impact to the business from some of the reported slowdown that we've seen in the left atrial appendage closure market? Thanks for taking the questions.

Thank you, Marie. Yeah. Let me correct one thing from my prior answer or just further expand on it. Within IVT, we feel quite good about the sensor-guided technology. That market's performing, with the exception of the OEM piece, that's performing right where we need it to be. The challenge, as you guys know, is Enzo ETM, and we can talk about that, but that's the main drag outside. In fact, it's the entire drag outside of closure. In terms of what we're seeing on the contracting front, I think the label expansion that we received from FDA earlier this fiscal year has really opened the door for us. And that in combination with the growing body of evidence we called out earlier this week, the 1,600 patient trial that was conducted at Emory using XL on large foreclosure procedures, both left atrial appendage and PFA. And that's really resonating, and it's helped us both in terms of contracting with IDMs where we didn't really have a presence before, as well as this ongoing shift that we think will gain momentum to the ASCs. If you think about what MVP XL means in that operation area, it's a workflow enhancement that, you know, with the same-day discharge and the rapid ambulation and the absolute minimal complications and the ability, if need be, to return to an access area that's, you know, unblemished from the initial procedure a month later, all those things play very well to the efficiencies and the speed with which AICs expect to operate. So we're seeing the benefit from that. In terms of left atrial appendage, it's a really small market for us. We only have one to one and a half access sites per LAAC procedure. So we haven't felt any headwind from the changes there. Probably concomitant therapy where it's being done jointly with PFA is a bigger factor, but that's captured in that 6% to 7% market growth that we're experiencing now.

Thank you. One moment for our next question. Our next question comes from David Rescott with Bayard. Your line is open.

Thanks for taking the questions and congrats on the results here. I wanted to unpack a little bit more on this plasma result, an impressive plasma result you put up. I think some of the restated plasma numbers are different than the prior plasma numbers that you had reported on. So curious on what the difference is there. And, you know, if we back out this software benefit you had last year, I think it's going to be putting the underlying plasma growth in that high teens number, which I think is better than what you did in 2026 on an XCSL, X software benefit basis for all of 2026. So, you know, curious on what the moving pieces are there. Again, it sounds like North American disposables were above 20%, so maybe there isn't necessarily a kind of one-ish time benefit from Persona Plus rollout. But trying to get a sense for, you know, again, what this Persona contribution on a quarterly and go-forward basis is versus that underlying, you know, collection or disposable growth would be.

Thanks, David. But let me go back a step. If you go back to our June 5th reclassification, essentially what we've done is take what was plasma, mainly source plasma, and combined it with that portion of the previous blood center segment that is being done on a Nexus device. whether it's being done for a source plasma customer or for one of the blood centers that are increasingly affiliated with fractionation and partnering up with one of our global customers. So that effectively is 80% of the combined two prior segments, leaving the non-plasma apheresis being that remaining 20%. That guide initially for that portion, the 20% portion, was low single digits. The guide for the 80% plasma piece was mid-single digits. We're raising that, and we combine those in a way to basically, excuse me, the plasma piece was mid-single digit positive. The blood center piece was mid-single digit negative. When we combine them, we end up with a low single digit positive. Today, we raise that guidance to low to mid-single digits to reflect the collective strength. We did outperform our initial expectations on the non-plasma piece. It's down 3%, so that's favorable and a good trend line for us. A lot of that's order timing and just some things that jump around a bit in the market, given it's a smaller piece. The big focus, you know, that 80%, you know, that is the overall plasma apheresis, 80% of that is the North American disposables. And that's the piece where we really saw, you know, this outperformance. We were up mid-20% in the U.S. and then, you know, EMEA followed by being up double digits as well. So across the board, and again, we've used the term trifecta, we're seeing share gains, we're seeing strong demand for source plasma, and we're benefiting by price associated with Persona Plus. That's what combined to get us that overall 8% that we feel really good about.

Okay, that's helpful. Maybe higher level, longer term, I guess, sticking with plasma, I think we've seen you know, in the past couple quarters, a lot of the collectors, you know, still pointing to this mid to high single digit worldwide growth on the plasma collection front. And some of them, you know, are pointing toward expansion of plasma collections in markets or geographies that are outside the U.S. So wanted to get your thoughts both on, I guess, that longer term, you know, US-specific plasma collection view or trajectory, as well as, you know, if or as there is this shift toward more collections coming from international markets, what at all would be the opportunity in the company's mind to be a part of that broadening collection market? Thank you.

Thank you, David. The outlook for plasma is and remains very attractive. It's underpinned by exactly what you just highlighted, the durable global demand for IG, which is driven by growing utilization across multiple indications, including primary and secondary immunodeficiencies where patients don't have viable alternative therapy. And on the autoimmune side, you know, the larger opportunities in CIDP and ITP where IG remains first-line therapy. And while other therapies will have a role to play. They're not displacing IG. They're not taking over new patient starts in those large categories. So we feel really good, as do our customers, about the durability that you highlight. We, you know, enabling their collections, are focused on extending the leadership that we've built through innovation, through customer globalization and standardization, and continued share gains. This is the first time, you know, at this point, I think ever, but certainly over the last decade, where the OUS collections in Europe in particular now represent 20% of the total collection volume. That's a new dynamic. Historically, it was a 90-10 split, but the cost of collections come down. Our customers are globalizing. That's enabled us to globalize. Essentially, all of our contracts now are global in scope, And I think we've really benefited by this growth in Europe and the Middle East as well. And so as that continues, I think we're exceptionally well positioned to play in that space. So I think our best days are yet to come.

Thank you. One moment for our next question. Our next question comes from Andrew Cooper with Raymond James. Your line is open.

Hey, everybody. Thanks for the question. And maybe just to tag onto that, I mean, like we've talked about, we used to talk about a higher level of growth that felt durable in terms of collections. You just had high single or low double digit in the U.S., but you're sticking with the zero to two. So what do you have to see to get comfortable to thinking about guiding in the way that you used to, which would be with that kind of more durable, more predictable, you know, mid-single-plus collection growth as the baseline as opposed to something more conservative?

Yeah, thanks, Andrew. We're very bullish on the durability and the sustainability. We want our guidance to be appropriately de-risked. And as we've said in the prepared remarks and elsewhere, we see solid demand. We see strong execution, but we're focused on the execution piece of it. And yes, there's a lot of upside if collection volumes continue to be robust in our forecast. But we're going to take a more prudent tack, which is to focus on that which we can control, share gains, persona plus rollout, some additional standardization and growth in the global markets. And we feel really good that that's our baseline. We're in a great position to be able to support whatever upside comes from collection volumes, but we want to get out of the business of trying to predict things that we don't control. So if you are so inclined, use your own number on collection volumes. The number that we've put into the guidance is zero to two.

Okay, no, helpful. And then just a couple updates maybe on some of the regulatory side and new launches. Where are we in terms of the XL label in Japan, especially given you have some of that great data in hand? And then just an update on PerQSeal and some of the process there would be great as well.

I appreciate that there. We're excited. I mean, we think about this year in many ways as the year of launch. If I go back a step, heparinase neutralization, which is now global opportunity for us within BMT, XL, to your point, driving the U.S. meaningfully. We have done the paperwork and kind of had the ongoing dialogue very favorably with Japan. We have anticipated that for later this fiscal year. We don't have a direct line of sight to the timing, so we've been pretty conservative in terms of what we put into our forecast, but we do anticipate this year. And, you know, we're also looking at perkycele elite, to your point. We're in dialogue with FDA. We've included all the costs associated with that U.S. launch. We haven't included any of the benefit. The anticipation is that we would get that this fiscal year, and that'll be upside to our plans going forward.

I'll stop there. One moment for our next question. Our next question comes from Michael Petoskey with Barrington Research. Your line is open. Hey, good morning.

Chris, I was wondering, the operating margin expansion in MedSurg, is there any way to break that out between BMT and IT, just in terms of what was majority driving that expansion?

Yeah, Mike. It's predominantly BMT, as I mentioned earlier. So Q4 was an unusually strong quarter for BMT. And as the revenue came down for that sequentially, we lost some leverage there. And that drives the lion's share of the sequential margin decline in that business.

And just, I guess, in terms of IT and, Chris, what you guys, you know, the response you guys have made over the last three, four quarters in terms of sort of fighting back in vascular closure, one of the levers you talked about, you know, two, three quarters ago is you were giving your guys a little bit more flexibility on price. And I'm just wondering how much that has helped in driving a recovery and if there's been any change in sort of that direction that you guys gave a few quarters ago in terms of flexibility on pricing.

Yeah, thanks, Mike. All three factors that we called out earlier are having a role. We've got a market that is increasingly stabilizing, which means the access site opportunity is accelerating probably twice what it was last year from, you know, three and a half or so percent to, you know, six or seven or better as it further matures. So, you know, that's there and that's clearly helping us. The investments in sales and marketing, you know, these guys are going in. And we remember last first quarter of last year, we took a big hit and we lost a large number of important accounts. Our team's more than holding their own in terms of winning those back and gaining new share across the board. And I do think giving them some latitude has helped, although this is a team that was purpose built to do this. there's a lot of intelligence being applied to make sure that when we are pulling the price level, we're pulling it intelligently for where the opportunity makes sense for us. It helps behind the scenes that our global manufacturing and supply teams have figured out increasingly how to make the product more cost effectively. So that's definitely weighing in our favor. And I don't want to discount the value of the clinical work that we've done, the label expansion for sure, but just also a body of evidence that is unique to VASCADE in all its forms in terms of the role it can play in closure. And I think that differentiation is helping us clearly against both of our existing competitors. So, again, we'll have more to say about that as the year progresses, but this is a stepwise progression. We expect the momentum to build from here.

Okay, great. one moment for our next question our next question comes from joe and which city your line is open hey good morning this is Anthony out for joanne thanks for taking our questions um i just want to switch gears to hemostasis hemostasis management um that's been quite durable for the past several quarters i'm curious i guess where we sort of are in the rollout of that hyper-neutralized cartridge as well as the ongoing upgrade to tech success? And then if you could maybe provide any pipeline plans for future assays on that capital.

Yep. Thanks for the question, Anthony. Yeah, for BMT, that probably doesn't get the mine share it deserves in terms of its contribution. If you go back over the last five years, you know, tech itself has grown on average, compound annual growth rate of 15%, one five. And we have every expectation that that favorable runway is going to continue and build momentum throughout this fiscal year. And a bunch of that now is increasingly around utilization. The split on revenue for the product is 85-15 disposables versus capital. That may even increase over the course of this year because of the success globally of the heparinase neutralization cartridge. The upgrade cycle from TEG 5000, we're in the final stages of that at this point. Teams really leaned in and accelerated that. That's great, but I think I called this out on last quarter's call. The revenue return per device with the six S's are two times what they were previously or with the TEG 5000s. That's a utilization story. That said, we're looking at a $400 million TAM, plus or minus globally, that's roughly 60% penetrative. We have 80 share of the market, and we feel great about that, but the opportunity from where we sit is to drive additional utilization, and that means we've got to do some additional work on subsequent indications, some of the global footprint, et cetera. So there's meaningful upside. We have to do the work to get there, but this is a team that's managed to exceed expectations at every turn. and I have no doubt they'll do so from where we sit.

Okay, that's helpful. And then free cash flow expanded really nicely year over year. It seems like a lot of that's driven by work capital improvement, but would maybe just love to hear more of the work you're doing there. And then I know Perky Steel was just tucked in, but any updated views on M&A and other adjacent markets that you could be interested in? Thank you.

Yeah, I'll start, you know, on on on free cash flow. Glad you asked. It's a great story. Our operating cash flow was fifty two million dollars in Q1. That's three times last year. And our conversion for the quarter was seventy five percent, which is strong given Q1 is typically our weakest cash quarter seasonally. And when you look at the trailing 12 months, which is really the right way to do this, the quarterly fluctuations can come and go. But that's 106% on a trailing 12-month basis. And you're right. So if you're just looking at Q1 and you look at our cash flow statement, you'll see that there's a fairly large source of cash year over year. It's mostly related to accrued liabilities and payables. And we had some favorable timing there. Now, we're reaffirming our 80% free cash flow conversion for the year, and I believe that that should give us plenty of room to keep funding growth and paying down debt and so forth as we move throughout the year.

And, Anthony, it's Chris. Just regarding capital allocation and how we think about that, you know, to James' point, we've really leaned in. The three metrics we run to haven't changed, revenue growth, margin expansion, and free cash flow. So that won't change. The outperformance we're having on cash flow is definitely strengthening the balance sheet and creating some optionality for us. Within that, our capital allocation goals haven't changed. We're looking to create the greatest long-term shareholder value we can. And at this point, the focus is organic. I mentioned the launches, HEP neutralization, MVP, Excel, Persona Plus. There will be several more, with any luck here, in the second part of the year. So stay tuned for that. That's a focus. We have done the share buybacks, $100 million last year. We still have an authorization for the remaining $325 million. And as James called out, we paid down some debt in the quarter and, again, subsequent to the quarter, $100 million in total. So I think you're going to see us more in terms of organic growth as the absolute top priority and then cleaning up the balance sheet and addressing where we can opportunistically a chance to return value to shareholders vis-a-vis the buybacks. And in the absence of that, we'll take care of some of the debt structure. But, you know, I'm not saying never, but, you know, M&A is off the table for now. Our focus is, you know, solid execution against the existing demand we have in our core products today.

Thank you. One moment for our next question. Our next question comes from Travis Steed with B of A. Your line is open.

Hey, congrats on a good quarter. I wanted to ask on the new board member, Martin, that you added, and how you're thinking about just, like, bigger picture, creating strategic value for shareholders and value for shareholders. And is Martin coming on the board, you know, part of that value of shareholder creation that you're thinking about over the next, kind of, 12 months or so?

Yeah, we think anytime we add a board member, we're looking at the total skill set, how that fits with the existing capabilities and competency of the board. Martin brings a lot in that regard, and it's not just this year. It's what I hope will be over the next decade of his contributions. You know, he's a really talented guy. He's got a track record of creating shareholder value pretty much everywhere he has been. Some of that's, you know, just real thoughtfulness around strategy, corporate strategy, understanding markets and how they move and how to compete within them. A lot of it's about execution and stabilizing and consistent delivery, which, of course, is a criticality. When we set out in the market, we were looking for, you know, real experience based, you know, prior CEO, prior CFO type of skill sets to really muscle build what is a very high performing board. And I think Martin's going to be a great fit in that regard.

I'll keep it at one.

One moment for our next question. Our next question comes from Mike Mattson with Needham & Company. Your line is open.

Hi. How's everybody doing? This is Joseph on for Mike. I'm just wondering if you guys have any commentary or color on hospital capital equipment budgets. It's, I think, going into the quarter, there's maybe some worry or some hesitancy and maybe haven't been seeing that from MedTech peers. So, curious what you guys are seeing there, I guess, specifically with TAG placements, but maybe even broader if you have any more color on that.

Yeah, Joseph, thanks for the question. We have not seen any pressures there. I know there's a lot of concern about it. It doesn't affect the IVT business. there's no underlying capital requirements there. There's some monitors and whatnot for the guidewire piece, but that's part of the broader sale, so it's not a factor. With regards to TAG, as I said, it's an 85-15 split between disposables and capital. There's probably more capital placed outside the U.S. this year, but that's just part of our share capture and utilization. We do see folks adding the additional analyzer or two or three. The good news about Now, and this is true across all of our products, but there's a very strong use case for TEG and visceral elastic testing that for any tight-fisted hospital procurement team who's willing to look at the value add, there's tremendous value add. When a system adopts TEG, they get better clinical outcomes, which is the first priority, but they also tend to lower their consumption of blood products because they use the right product in the right way and not otherwise. So the aggregate, blood is a top three expenditure for every hospital in the world. By helping conserve and do practice better blood management techniques, wind up lowering the aggregate cost. That's a big part of it. I think the other big part of it is we're still below $50,000 on an analyzer. It just doesn't hit anybody's thresholds. We've seen no headwinds there.

Okay, super clear. And then maybe just to follow up on some previous questions, just I guess maybe on cash flow, the strength in the quarter and just given that it's usually the seasonally weakest, I'm just wondering if it maybe changes the pace or the size of share buybacks under the current authorization. And then just on Persona Plus, I'm not sure if you said it, but I was wondering if you could maybe just chart out where you guys are in the adoption curve with the current Plasma customer base, and then that's it from us. Really appreciate it, and congrats on a strong quarter.

Yeah, thanks for the question. Let me address the cash flow piece. So just as a reminder, we already purchased 3 million shares over the prior 18 months or so. So having executed well on that, it felt like the right moment to turn some attention to the balance sheet, especially with money market yields normalizing and our borrowing costs staying elevated. So what you see in the quarter was that, and as I mentioned, we paid down $50 million on the revolver during Q1. And then right after Q1, we paid down another $50 million on the revolver. So we've prioritized debt pay down right now. We still have $200 million left on the revolver. And we'll balance that with share buybacks. But as I mentioned earlier, the good news is that because we have such strong cash flow, we have plenty of room really to do as we choose, whether it's funding growth, paying down debt. or returning capital to shareholders, and we intend to do all of that in a balanced way.

And then just in terms of your question regarding Persona Plus, as I said, we're excited. We're ahead of schedule and expect that to continue. The response has been outstanding. Customers are getting, you know, higher than expected, you know, plus 5% off of the base Persona yields they already attained, and we'll continue to lean into that. As I said, we can move fast. It's a firmware upgrade. Everything else is already – we laid the foundation for this when we did the original persona upgrades. So conceptually and without much to do, we could convert the entire U.S. market this year. That's not what's in our guidance. What's in our guidance is where we have existing contracts and a committed timeline to roll out. But I think this one has the potential to snowball and build momentum as it goes. It's a really good innovation for the market. So stay tuned.

Thanks so much.

And I'm not showing any further questions at this time. And as such, this does conclude today's presentation. We thank you for your participation. You may not disconnect and have a wonderful day.