Integer Holdings Corporation (NYSE:ITGR) Q4 2025 Earnings Call Transcript

Integer Holdings Corporation (NYSE:ITGR) Q4 2025 Earnings Call Transcript February 19, 2026

Integer Holdings Corporation misses on earnings expectations. Reported EPS is $1.38 EPS, expectations were $1.7.

Operator: Good morning, and thank you for standing by. Welcome to Integer Holdings Corporation’s fourth quarter 2025 earnings call. My name is Adra, and I will be your conference operator today. After the prepared remarks, there will be a question and answer session. Please note this call is being recorded. I would now like to turn the conference over to Kristen Stewart, Director of Investor Relations. Please go ahead. Good morning, everyone. Thank you for joining us, and welcome to Integer Holdings Corporation’s fourth quarter 2025 earnings conference call. With me today are Peyman Khales, President and Chief Executive Officer, and Diron Smith, Executive Vice President and Chief Financial Officer. This morning, we issued a press release announcing our fourth quarter and full-year 2025 results.

We have posted a presentation to accompany today’s call on the Investor Relations page on our website at integer.net. On today’s call, we will provide an update on our strategy, review our adjusted financial results for the fourth quarter and full year 2025, and discuss our financial outlook. After our prepared remarks, we will open the line for your questions. As a reminder, the results and data we discuss today reflect the consolidated results of Integer Holdings Corporation for the periods indicated. During our call, we will discuss some non-GAAP financial measures. For reconciliations of non-GAAP financial measures, please refer to the appendix of today’s presentation, today’s earnings press release, and the trending schedules, which are available on our website at integer.net.

Please note that today’s presentation includes forward-looking statements. Please refer to the company’s SEC filings for a discussion of the risk factors that could cause our results to differ materially. With that, I will turn the call over to Peyman.

Peyman Khales: Thank you, Kristen. Thank you to everyone for joining the call today. This morning, we announced our fourth quarter and full-year 2025 financial results. Through diligent execution, the Integer team delivered sales and adjusted EPS towards the high end of the outlook range we provided in October. For the full year, sales increased 8% on a reported basis and over 6% organically, and adjusted operating income increased 13%. Adjusted EPS increased 21%, reflecting the higher sales, improved profitability, and effective capital management. In the fourth quarter, we repurchased $50,000,000 of our common stock. In addition, this morning, we announced our intention to initiate an accelerated share repurchase program to repurchase approximately $50,000,000 under our existing share repurchase authorization.

Our share repurchase program reflects the confidence of the board and management in our strategy, financial position, and ability to generate strong free cash flows. We also issued our 2026 financial outlook. We are maintaining the midpoint of the reported sales range that we shared in October and narrowing the range. We expect reported sales to be down 1% to up 1%, and organic sales to be flat to up 3%. This outlook continues to include a 3% to 4% headwind from three new products due to lower than expected market adoption. Excluding the three new products, our underlying business is expected to grow 4% to 6%, in line with the market, underscoring the durability and the strength of our core portfolio. We continue to invest in our key growth initiatives and capabilities that support our long-term strategy, while being disciplined with our near-term expense management.

For 2026, we expect adjusted operating income to be down 5% to up 1%, and adjusted EPS to be down 2% to up 6%. The fundamentals of our business are strong, and we remain focused on executing our disciplined growth strategy. We have a robust and diversified pipeline, and when combined with the strength and durability of our underlying business, we remain confident in our ability to return to 200 basis points above market organic growth in 2027. Before Diron reviews our financial results, I would like to provide an overview of our business and an update on our strategy as we typically do on our fourth quarter call, and discuss why I remain confident in our ability to deliver value creation for our customers and shareholders. Integer Holdings Corporation is a leading medical device contract design and manufacturing organization serving the largest global medical device original equipment manufacturers and emerging innovators.

Our vision is to improve patients’ lives around the globe one device at a time. We accomplish this by advancing the goals of our medical device customers through industry-leading engineering and manufacturing with a relentless commitment to quality, service, and innovation. Our global scale manufacturing and R&D footprint allows us to serve our customers effectively and efficiently around the world. We offer one of the industry’s broadest and deepest portfolios of capabilities and product offerings across the cardiovascular, neuromodulation, and cardiac rhythm management markets. With this, we can meet a wide range of our customer needs throughout the product life cycle, help them bring products to market faster, and simplify their supply chain.

Integer Holdings Corporation is well positioned to create long-term value for shareholders. We have a proven track record of financial performance, delivering strong results through the execution of our disciplined growth strategy. The medical device industry is an attractive end market supported by durable growth drivers, and we continue to focus on several high-growth markets where we have a strong competitive advantage. We are highly differentiated in the industry with deep expertise, broad capabilities, innovative technologies, and scalable global manufacturing. We have a robust and diversified product development pipeline oriented to high-growth markets with the world’s top global medical device companies and many emerging innovators.

Our high-performance culture is a competitive advantage, centered on customer centricity, innovation, and operational excellence. In addition, we are disciplined with our capital management. We are investing to support our growth while maintaining a strong balance sheet and prioritizing long-term shareholder value creation. While select new product headwinds are expected to impact our 2026 outlook, we remain confident in our ability to return to above market organic sales growth and margin expansion in 2027. Now let us take a closer look at each of these areas. The medical device market remains highly attractive, underpinned by long-term growth drivers. Within this landscape, we are focused on the cardiovascular, neuromodulation, and cardiac rhythm management markets, which are expected to grow in the mid-single digits.

Our strategy centers on investing to continuously expand our differentiated capabilities and partnering with our customers early in the design and development stage of new products. We are focused on new products in targeted high-growth markets, including electrophysiology, neurovascular, structural heart, and neuromodulation. By engaging early in the development process, we help our customers accelerate innovation and drive successful product launches. We have dedicated growth teams responsible for leading product line strategies in highest priority markets. These cross-functional teams bring deep expertise in our key markets, including customer needs, therapies, products, global trends, and competitive landscape. They continuously refine our strategies to address evolving market dynamics and ensure our success.

In addition, the growth teams guide and prioritize investments in capabilities and capacity to support long-term sustainable growth. In recent years, we have invested both organically and inorganically to expand our capabilities in our targeted high-growth markets. These investments are designed to enhance the value we deliver to our customers to support their long-term success, which includes speed to market, a reliable and global supply chain, and the highest quality products. We have made many capability investments in recent years, and some examples include advanced automation, laser processing, extrusion, complex assemblies, miniaturization, and catheter process platforming. We have also invested to expand our rapid prototyping capabilities, which allows us to help our customers bring their products to market faster.

As we have shared in the past, we have expanded a number of our manufacturing and R&D facilities to support our growth. For example, we have expanded our Salem, Virginia facility where we perform laser processing and micromachining, and plan to further expand our Alden, New York facility which supports the CRM and neuromodulation implantable device. In addition to physical capacity expansions, we have ongoing continuous improvement initiatives to optimize our existing footprint. In parallel, we have executed several strategic tuck-in acquisitions that have strengthened Integer Holdings Corporation’s position in high-growth markets and added specialized high-value capability. For example, InNeuroQo significantly enhanced our capabilities in neurovascular.

Pulse Technologies deepened our capabilities in micromachining and strengthened our pipeline across several high-growth markets such as electrophysiology, leadless pacing, neuromodulation, and structural heart. And our 2025 acquisitions greatly enhanced coating capabilities and furthered our vertical integration strategy. Integer Holdings Corporation is a partner of choice because we are differentiated by our technical expertise, broad capabilities, innovative technologies, scalable manufacturing, and exceptional customer service. We support our customer success throughout the product life cycle, from concept to commercialization, enabling innovation, accelerating speed to market, and simplifying our customer supply chain. We have unparalleled subject matter expertise across a broad range of technical disciplines.

We are leaders in design for manufacturability, and we have deep product design and regulatory expertise. We are known for our capability breadth and end-to-end solutions. We have a comprehensive portfolio of engineered components, complex subassemblies, and finished devices. Our innovative technologies include an extensive set of proprietary materials and processing capabilities as well as in-house advanced manufacturing and automation. We also offer innovative market-ready access and delivery products. We have robust manufacturing and quality systems across our global footprint. Our customers recognize our ability to seamlessly transition their critical products from the development stage to scale production to support their growth. Product development sales are the compensation we receive from customers as we partner with them to design and develop new or next-generation products.

Generally, an increase in product development sales means we are working on more programs, larger programs, more complex programs, or a combination of the three. We believe product development sales are a good indicator for the size of our development pipeline, and they are a leading indicator of the contribution from new products to future growth. Since 2017, product development sales have increased more than 300%, and approximately 80% of our development sales are for products in higher growth markets. This momentum highlights both the strength of our customer relationships and the strategic focus of our portfolio. Our deep and broad pipeline includes many exciting programs that are focused on targeted high-growth markets. To highlight a few, our pipeline includes participation in devices used in electrophysiology procedures, including pulsed field ablation, structural heart delivery systems and components for structural heart implants, neurovascular therapies to treat both hemorrhagic and ischemic stroke, renal denervation, and neuromodulation devices designed to address a wide range of conditions.

A robust and diverse pipeline supports our expected return to above market growth in 2027. Within CRM and neuromodulation, our pipeline of emerging customers with PMA products, primarily within the neuromodulation market, continues to be robust. We are engaged with 40 customers across development phases. As these life-saving and life-enhancing products move through regulatory approval and into the manufacturing ramp phase, Integer Holdings Corporation benefits from accelerated sales growth. Sales from customers in the product introduction and launch phases have grown from $10,000,000 in 2018 to approximately $125,000,000 in 2024. Looking ahead, we expect this category to grow at a 15% to 20% compound annual growth rate over the next three to five years, contributing to our ability to grow above market.

Our people and our culture are central to our success. Integer Holdings Corporation has a high-performance culture that focuses on delivering value to our customers and shareholders. We recently refined our operational focus areas to customer success, operational excellence, and leadership impact. Customer success recognizes that Integer Holdings Corporation’s success depends upon our ability to enable our customers to achieve their goals and objectives. Operational excellence reflects our focus on continuous improvement at all levels of our organization, to ensure we meet our customer needs effectively and efficiently while creating value for our shareholders. Leadership impact reflects our ongoing investments in developing strong leaders to continuously raise the bar on performance.

As part of our operational excellence focus, we continue to advance the Integer Production System, our lean-driven operational framework that integrates advanced engineering and manufacturing and continuous improvement practices to deliver consistent high-quality medical device manufacturing that drives customer success. To further enhance effectiveness and efficiency, as part of our Integer Operating System, we are launching a multiyear program to modernize our ERP platform. This investment is expected to strengthen our operational capabilities, improve productivity, enhance working capital management, accelerate commercial time to market, and position Integer Holdings Corporation for long-term scalable growth. We have dedicated a cross-functional team of top talent to execute a measured and phased implementation over the next several years.

We continue to be disciplined with our capital management to drive sustainable long-term value creation for our shareholders. Our capital allocation framework includes organic investments, including capital expenditures to enhance our technology capabilities, automation, and capacity; tuck-in acquisitions to expand our capabilities and presence in high-growth markets; and opportunistic share repurchases. We have maintained a disciplined approach to capital management for many years now. Since 2021, we have invested 5.8% of sales in capital investments and over $700,000,000 in tuck-in acquisitions. In November, our board authorized a share repurchase program of up to $200,000,000. In the fourth quarter, we repurchased $50,000,000 of our common stock.

And today, we announced our intention to commence a $50,000,000 accelerated share repurchase program. Looking ahead, we expect to continue investing both organically and inorganically to support our growth objectives and reinforce our competitive position. Our strategy of being positioned in the right markets, investing in differentiated capabilities, getting designed in early in new products and high-growth markets, creating a high-performance culture, and remaining disciplined in our capital management has delivered strong financial results. Since 2022, we have grown sales at a 12% CAGR, well above our market, while expanding our margins by nearly 400 basis points and maintaining our leverage ratio within the 2.5x to 3.5x range. While 2026 is expected to be impacted by temporary headwinds, we are laser focused on executing our strategy to achieve our long-term strategic financial objectives.

These objectives are growing sales 200 basis points above market, growing adjusted operating income twice as fast as sales, and maintaining a net debt leverage ratio of 2.5x to 3.5x. I will now turn the call over to Diron to review our financial results and our outlook. Thank you, Peyman. Good morning, everyone, and thank you again for joining today’s call. Our fourth quarter sales and adjusted EPS were at the high end of our outlook ranges that we communicated in October, reflecting strong execution by our global team. Fourth quarter sales totaled $472,000,000, reflecting 5% growth on a reported basis and 2% growth on an organic basis. Organic sales growth removes the impact of acquisitions, the strategic exit of the portable medical market, and foreign currency fluctuations.

We delivered $106,000,000 of adjusted EBITDA, up $11,000,000 compared to the prior year, or an increase of 11%. Adjusted operating income grew 10% versus last year, as we continue to make progress on our margin expansion initiatives. Our adjusted operating margin expanded by 74 basis points to 17.6% driven primarily by improvement in gross margin. Adjusted net income for the fourth quarter 2025 was $2,000,000, up 22% year over year, while adjusted earnings per share totaled $1.76, up 23% from the same period last year.

Diron Smith: Both reflecting interest expense savings from the convertible note offering in March 2025. For the full year 2025, we delivered strong financial results. Sales totaled $1,854,000,000, reflecting 8% growth on a reported basis and 6% growth on an organic basis. We delivered $402,000,000 of adjusted EBITDA, an increase of 12% versus the prior year. Adjusted operating income grew 13% versus 2024, and our adjusted operating margin was 17.3%. Adjusted operating margin expanded 76 basis points, reflecting gross margin improvement and disciplined expense management. Adjusted net income for the full year was $226,000,000, up 23% year over year, while adjusted earnings per share totaled $6.40, up 21% from the same period last year.

Turning to our sales performance by product line, Cardio & Vascular sales increased 11% to $284,000,000 in the fourth quarter 2025, driven by the Precision Coatings and VSI Parylene acquisitions and strong demand in neurovascular. On a trailing four-quarter basis, C&V sales increased 17% to $1,107,000,000 with strong growth from new product ramps in electrophysiology, contribution from acquisitions, and strong demand in neurovascular. Cardiac Rhythm Management and Neuromodulation decreased 2% to $167,000,000 in the fourth quarter 2025, as cardiac rhythm management growth was offset by a decline in neuromodulation, primarily driven by lower demand from select emerging customers with PMA products. On a trailing four-quarter basis, CRM&N sales increased 1% to $669,000,000 with CRM and neuromodulation growing at market, offset by the planned decline of an early SCS neuromodulation finished implantable pulse generator customer which was announced in 2020.

Product line detail for other markets is included in the appendix of the presentation, which can be found on our website at integer.net. For the full year 2025, we delivered strong adjusted net income and adjusted earnings per share performance. Adjusted net income increased by $42,000,000, or 23%, and adjusted earnings per share increased by $1.10, or 21%, both growing much faster than our 8% sales growth. Operational improvements accounted for $30,000,000, or $0.86 per share, and reflected the benefits of higher sales volume, manufacturing efficiencies, operating expense management, and acquisition performance. Interest expense was $14,000,000 lower than the prior year, which contributed $11,000,000 after tax, or $0.33 per share, reflecting the savings from the convertible debt offering completed in March 2025.

Our adjusted effective tax rate for the full year was 17.2%, down from 18.3% in the prior year, primarily reflecting tax benefits from R&D investment, lower interest expense, and stock-based compensation. These improvements were slightly offset by higher foreign exchange pressure, which reduced adjusted net income by $2,000,000, or $0.07 per share, and an increase in adjusted weighted average shares outstanding, which reduced our adjusted EPS by $0.11. In the fourth quarter 2025, we generated $55,000,000 of cash flow from operations. Our CapEx spend was $27,000,000. Free cash flow was $28,000,000 in the fourth quarter. For the full year 2025, our cash flow from operations totaled $196,000,000, a $9,000,000 decrease from the prior year. Our CapEx spend was $91,000,000, or approximately 5% of sales.

This resulted in free cash flows of $105,000,000, an increase of $5,000,000 versus the prior year. At the end of the fourth quarter 2025, net total debt was $1,190,000,000. Our net total debt leverage at the end of the fourth quarter was 3.0x trailing four-quarter adjusted EBITDA, which is at the midpoint of our strategic target range of 2.5x to 3.5x. Turning to our financial outlook. The 2026 outlook we are sharing today is tightened from our preliminary outlook shared in October. We are holding the midpoint of our sales growth and the high end of adjusted EPS growth from our October preliminary outlook. For the full year 2026, we expect reported sales to be in the range of $1,826,000,000 to $1,876,000,000, down 1% to up 1% on a reported basis.

On an organic basis, we expect sales to be flat to up 3%.

Peyman Khales: We have proactively aligned our cost structure with

Diron Smith: expected manufacturing volumes. As we expect the three new product headwinds to be short term and we continue to support our growth initiatives, we are not making structural changes in our organization. We expect our adjusted EBITDA to be in the range of $391,000,000 to $415,000,000, down 3% to up 3% versus the prior year. We expect adjusted operating income to be in the range of $304,000,000 to $324,000,000, down 5% to up 1%. We expect adjusted net income to be in the range between $216,000,000 and $232,000,000, down 4% to up 3%. This range incorporates an expected adjusted effective tax rate of 16% to 18% for the full year, with the first quarter slightly above the full-year rate. Lastly, we expect adjusted earnings per share of between $6.29 and $6.78, down 2% to up 6% versus the prior year.

Our outlook reflects the reduction in outstanding shares from our fourth quarter share repurchase and an estimated impact from the $50,000,000 accelerated share repurchase that we announced today. Taking a closer look at our sales performance, as I mentioned, we expect sales to be down 1% to up 1% on a reported basis and flat to up 3% on an organic basis. We expect continued growth across the vast majority of our portfolio. However, as we communicated in October, our organic outlook is being impacted by lower sales of three new products: two in electrophysiology and one in neuromodulation. We continue to be our customers’ supplier of these products, but market adoption has been lower than anticipated. These products represented nearly 6% of total sales in 2025, resulting in an approximate 3% to 4% headwind, and we expect the sales of these three products to be significantly lower in 2026.

Excluding these three new products, we expect our underlying sales to grow approximately 4% to 6%, which is in line with the market. We also expect an inorganic decline of approximately 1.3%, which reflects the now completed portable medical exit, slightly offset by contribution from acquisitions and foreign exchange. Our product line outlooks remain consistent with our October preliminary outlook. We expect C&V sales to be flat to up low single digits, reflecting the impact of new products in electrophysiology. We expect CRM&N sales to be flat to up low single digits, reflecting the impact of the new product in neuromodulation. In other markets, we continue to expect a decline of approximately $30,000,000 to $35,000,000, primarily due to the portable medical exit.

Peyman Khales: We expect organic

Diron Smith: sales to be down low single digits in the first half and return to market growth during the second half, consistent with the October preliminary outlook. The first half performance primarily reflects the significant reduction in sales related to three new products, which were ramping during 2025 and are expected to be at a lower run rate in 2026. For the first quarter, we expect reported sales to be flat to down low single digits. We expect nominal sales to then ramp sequentially throughout the remaining quarters. The quarterly sales cadence reflects a 5% tailwind in first quarter and a 5% headwind in fourth quarter due to year-over-year differences in production days. For the first quarter, we expect our adjusted operating income margin to decline 200 to 250 basis points versus the prior year.

We expect our adjusted operating income margin rate to improve throughout 2026 and expect to return to margin expansion during the second half of the year. We expect cash flow from operations to be between $200,000,000 to $220,000,000, an increase of 7% at the midpoint of the outlook. We expect capital expenditures of between $95,000,000 and $105,000,000, or approximately 5% to 6% of sales. As a result, we expect to generate free cash flow between $100,000,000 and $120,000,000, which represents a 5% increase at the midpoint. We expect our 2026 year-end net total debt to be between $1,170,000,000 and $1,190,000,000. This reflects the estimated impact of the accelerated share repurchase program announced this morning. We expect our leverage ratio to be within the targeted range of 2.5x to 3.5x times trailing four-quarter adjusted EBITDA in 2026.

I will now turn it back to Peyman. Thank you, Diron.

Peyman Khales: In summary, the Integer team delivered a strong performance in 2025 with sales up 8% and adjusted earnings per share up 21%. While 2026 is expected to be impacted by temporary headwinds from three new products, the fundamentals of our business remain strong. Our pipeline is robust and diversified, and when combined with the strength of our underlying business, we are well positioned to return to growth. We remain confident in our ability to deliver 200 basis points above market organic sales growth in 2027. We will now open for questions. Thank you.

Operator: We will now begin the question and answer session. As a reminder, if you would like to ask a question, in order to take as many questions as possible, please limit yourself to one question and a related follow-up if necessary. Our first question comes from Brett Adam Fishbin at KeyBanc Capital Markets.

Q&A Session

Brett Adam Fishbin: Hey, guys. Good morning. Thanks very much for taking the questions.

Peyman Khales: Just wanted to start with the guidance top line. Think, you know, most people will be encouraged to see a pretty stable outlook relative to last quarter. But we just wanted to touch on the decision to lower the high end of the preliminary range. I think last quarter, you were at 0% to 4% organic. Now 0% to 3%, so just a slight change. But just curious what the incremental reason for that was and if it has something to do specifically with what you saw in January or more about just the pace of the improvement the second half of the year?

Brett Adam Fishbin: Alright. Super helpful. And then, just thinking about margins, and really more of a 2027 question. So the 2026 outlook still implies some pressure, I think, you know, given that sales are expected to be subdued. But, you know, you kind of noted the expected recovery to above-market sales growth in 2027 and then a return to operating margin expansion. So maybe just a little bit more on what drives the return to operating income growth above sales growth in 2027.

Peyman Khales: Yeah. Sure. I think for 2026, as Diron mentioned in the prepared remarks, we are not making any structural changes to our business because we have expectations to get to above-market growth in 2027. So as we progress throughout 2026, we expect to get to margin expansion in 2027. When we get back to 200 basis points over market performance, we will continue to deliver margin expansion as we have as part of our strategy and as part of our Integer Production System. Our long-term strategy has not changed: deliver 200 basis points over market and 2x margin expansion.

Brett Adam Fishbin: Alright. Great. And then last one for me. You know, I always enjoy this strategic update and some of the updates around the portfolio and PMA products. I think, compared to last year, the total number of PMA products is up by one. Just wanted to maybe ask about overall contribution from the new products that have been coming through and how you kind of expect those to perform this year. A little bit, like, just more long term. It kind of seems like more of the future activity is in the development and clinical phase rather than regulatory. So whether you would kind of expect any of those to progress this year and reach the market by 2027 or if there is kind of a little bit gap in some of the development product actually reaching commercialization. Thank you very much for taking the questions.

Peyman Khales: Yeah. No problem. The model that we have, what we have talked about, that we expect this portfolio of products to grow 15% to 20% in a three- to five-year period, takes into account all the dynamics that you talked about. We have a good pipeline that we will be working on. We have about 40 customers in this grouping, if you will. And we have really good visibility to the products that we are working on. Number one, the products that are already in the market: we have expectations of what the growth of those products will be. And then we have good visibility to the launch dates and the expected revenues that, on a risk-adjusted basis, give us confidence that we can grow at 15% to 20% in a three- to five-year period. So what you are seeing here in terms of adding one more customer in the launch phase is in full alignment with our expectations. It has already been modeled in our projections.

Operator: We will move next to Matthew Oliver O’Brien at Piper Sandler.

Diron Smith: Good morning. Thanks for taking the—

Brett Adam Fishbin: Maybe just to follow up on the first question there on the reduction to the high end of the guide. I do not want to over—

Diron Smith: focus on this too much. But—

Peyman Khales: the organic number is down 100 basis points from flat to up 4% to flat to up—

Diron Smith: three. And if I just look at the math on that, you know, it is like $9,000,000 you are taking out—

Brett Adam Fishbin: like, at the midpoint by taking it down by 100 bps. So what I am really trying to get at is there is nothing—

Diron Smith: from a new customer perspective or existing customer perspective that is making you think, okay, you know what, we are going to get a little less revenue from somebody than we initially expected. And that is why we are taking the high end of the guidance range down.

Peyman Khales: Good morning, Matt. No. There are no specific changes, as you were pointing out, to customer forecasts and whatnot. And the guidance that we have is in full alignment with our expectations and in alignment with what we had communicated back in October. We have tightened the range around the midpoint that we had communicated. And again, the individual pieces and the top end are probably more rounding than anything else. Okay.

Brett Adam Fishbin: Alright. Fair enough. And then as a follow-up,—

Diron Smith: I just noticed that DSOs—

Peyman Khales: are kind of meaningfully at the end of Q4.

Diron Smith: Any real reason for that? And how do we think about that metric progressing over the course of this year? Thank you.

Brett Adam Fishbin: Yeah, Matt. Certainly. Yeah. On the DSO,—

Diron Smith: we made a decision to limit the amount of accounts receivable factoring that we did in the fourth quarter. And that is really looking at maintaining our financial flexibility. As you can tell, our revolver is paid down, and any incremental cash that we would have generated through the factoring would have gone to further prepay on our Term Loan A. So we thought there was a better use of cash to limit our factoring in the fourth quarter, which—

Brett Adam Fishbin: effectively raised the DSO from what you had typically seen.

Diron Smith: Okay. Makes sense.

Peyman Khales: Thank you. Yep.

Operator: We will take our next question from Richard Samuel Newitter at Truist Securities.

Peyman Khales: Hi. Thanks a lot. Two from me. Maybe the first, it looks like—

Brett Adam Fishbin: in addition to the organic guide getting narrowed—

Diron Smith: towards, you know, a little bit at the—

Brett Adam Fishbin: top end, operating margin, or the implied operating profit margin, is also a little bit—

Diron Smith: below where the implied level was before, and there is a really, really steep—

Peyman Khales: year-over-year 1Q decline, or bigger than what we were projecting. So if you could just maybe talk a little bit about the 1Q, kind of the steep 1Q falloff—

Richard Samuel Newitter: there, especially if you have extra selling days helping the 1Q. And then within the context of margin, if you could also— I think you had mentioned on the third quarter call that you expected gross margin to improve year over year. Can you maybe just break down the operating margin comments within the context of OpEx and gross margin? Thank you.

Diron Smith: Richard, this is Diron. I will jump in here. Yeah. As you look at our operating margin, we have talked before, and Peyman just mentioned a moment ago, about not making structural changes in the business because we want to make sure we are well positioned to deliver on the return to market growth in the second half and the 200 basis points above market in 2027. So as you look at that structurally, there is a level of fixed cost to absorb. And on the lower sales numbers, particularly in first quarter, there is a little bit more of a challenge in terms of absorbing those fixed costs in the business in the quarter. So as we look at the model and we look at what our structure is on the sales guidance for first quarter, that is where we see the 200 to 250 basis points of margin pressure—

Richard Samuel Newitter: there. And then as our sales kind of nominally grow—

Diron Smith: throughout the remaining quarters of the year, we expect to see that operating margin rate grow as well. So I think those are a couple of other critical pieces driving that—

Richard Samuel Newitter: overall kind of margin outlook for the year.

Diron Smith: You know, as you know, we do not necessarily give guidance on our gross margins. But I think what we had said in the past was that with the Integer Production System, we expect to fully continue driving variable margin expansion—so, managing our direct material and direct labor and seeing margin expansion there—

Richard Samuel Newitter: while we still will see pressure, depending on where we are able—

Diron Smith: to land in the sales outlook on the fixed cost that sits in gross margin and overhead. So it is going to be a little bit of a mixed story within gross margins.

Richard Samuel Newitter: Okay. That is helpful. And then just on the discrete products that you are calling out, I appreciate the full-year 300 to 400 basis point impact, and it continues to be. I guess we are a quarter in since you last provided your preliminary outlook. We have seen results for the fourth quarter, especially in the all-important electrophysiology segment. Any characterization you can provide on your discussions with your customers on their views of the end markets that kind of took you by surprise in their specific products? And what can you tell us about your visibility today versus three and four months ago, with respect to how they are approaching their forecasting so that we can get confidence that 300 and 400 basis point impact is the right one even beyond the quarter ahead? Thank you.

Peyman Khales: Yeah. No problem. So we finished the fourth quarter in full alignment with our expectations, how we had modeled things. And the discussions that we have had since October with our customers and continue to have are in full alignment with how we modeled things. Just to step back a little bit, Rich, when we provided our guidance in October, we had done a lot of homework, if you will, working with our customers and using our own intelligence to try to come up with a different view of the forecast. And at that time, we talked about that we provided a wider range in our preliminary guidance that took into account different possibilities. And as we have worked with our customers, what is transpiring and what we expect for 2026 is in full alignment with what we had modeled and what our customers are telling us. So the forecasting patterns, the ordering patterns, are in alignment with the projections and what we are guiding. Okay. Thank you.

Operator: We will go to our next question from Travis Steed at Bank of America.

Richard Samuel Newitter: I wanted to ask on the Q1 revenue kind of flat to down low single digits reported. There are 5% selling days, kind of five to seven extra days, but I know there is an inorganic impact. So make sure I understand the actual organic Q1 to Q2 kind of bridge and anything you would call out on how you would think about what is the kind of the one-time impacts and some of the recovery in your different business in Q1 versus later in the year?

Peyman Khales: So we had, in October, guided to a first half of the year being down in the low single digits and that we would grow to market growth throughout the second half of the year in 2026. That view has not changed. Let me just start with that. And we still expect the same growth profile. Now, talking about the first quarter, as you mentioned, the impact of inorganic, yes, there is a little bit of an impact there. But the impact of acquisitions is minimal, really. But as you look at the first quarter and the fourth quarter, we just wanted to highlight that there is a 5% tailwind in the 1Q numbers and there is a 5% headwind in the fourth quarter. So when you look at that, when you adjust for that, the quarterly profiling is exactly as we had expected—that we would start the year a little bit lower and then grow to market growth throughout the course of 2026. Okay. Thank you. And then maybe—

Richard Samuel Newitter: another kind of bigger picture question. You know, as a new CEO, just thinking about how you are thinking about shareholder value creation and the pros and cons of balancing more shorter-term value creation, maybe a partnership route versus more longer term, independent shareholder value creation?

Brett Adam Fishbin: Yeah.

Peyman Khales: It is a good question. And I think, really, the only way we can create value for our shareholders in a sustainable fashion is to have a long-term view of our strategy and how we execute. I think we—let me start with—I am a strong believer in our strategy. I was there in 2018 when we started looking at creating our new strategy and refining and executing it. As we have done over the past many years, we will continue to refine our strategy and execute on it. We believe that we can be successful if we can position ourselves to deliver value to our customers and make them successful. That is the only way that we can be successful in a sustainable fashion. So if your question is both in terms of short term and long term, we believe—I believe—that the only way we can create value is by continuing to execute our strategy, have a long-term view of what we need to do to deliver value for our customers, which is the only way that we can deliver value for our shareholders.

Great.

Richard Samuel Newitter: Thank you.

Operator: We will take our next question from Andrew Harris Cooper at Raymond James. Hey, everybody. Thanks for the questions.

Richard Samuel Newitter: Maybe just first, kind of diving into a little bit of the trajectory—

Brett Adam Fishbin: heading into 2027. You guided to the sort of ex those challenging products—

Richard Samuel Newitter: being with the end market for the year. What happens through the course of 2026 to get you from we are going to be kind of aligned with the market to stepping back up—

Brett Adam Fishbin: above in 2027? What has to happen, and maybe what changes throughout the year to get you—

Peyman Khales: So I think the first thing to consider is that our core business is very strong. We are saying that our core business is expected to grow in alignment with the market. And by core business, I mean our business excluding the impact of the three products that we have talked about. So the rest of the business is strong; we expect that it will continue to be strong as we enter 2027. In addition to that, we have new products that are expected to launch in the second half of this year and during the course of 2027. So when we look at the combination of these things—and by the way, we no longer will have the headwinds associated with these three products. So when we consider all these elements together, and considering the strength of the pipeline that we have, this is what gives us confidence to get back to 200 basis points over—

Richard Samuel Newitter: Okay. Helpful. And then—

Peyman Khales: following up on one from earlier as well.

Brett Adam Fishbin: On the PMA products and the 15% to 20% goal, historically, you have normally given an update to that number on kind of a biannual basis. But—

Peyman Khales: can you share—

Brett Adam Fishbin: what those new products generated in 2025? And I ask that just with, in the back of my head, the thought of this one PMA product likely being a headwind there. So how do we think about making up for that in that three- to five-year relative to maybe a little bit of a challenge here with at least one product?

Peyman Khales: Yeah. These products, as we had mentioned, had strong growth in 2025. And then we had a slowdown, particularly in the fourth quarter, as we expected. Let me just also remind you that we had exceptionally strong growth from these products in 2024. So we also had some challenging comps. So net-net, I would say that these products grew in alignment—with the fourth quarter headwinds—these products grew within alignment of the market in 2025. Okay.

Brett Adam Fishbin: I will stop there and chat more in follow-up. Thank you.

Peyman Khales: Great. Thank you.

Operator: Next, we will go to Nathan Treybeck at Wells Fargo.

Peyman Khales: Hey, guys. Thanks for taking the question. You know, I just wanted to touch on 2027 again. You know, just assuming the product revisions are really just contained in the three products,—

Diron Smith: and you lap those headwinds in the second half of this year,—

Brett Adam Fishbin: and you obviously said you are not making structural changes to the company,—

Diron Smith: I am trying to understand, like, why would the comps—

Richard Samuel Newitter: not result in 2027 growth kind of above your, you know, formula of 200 basis points above market.

Peyman Khales: Well, our long-term strategic objective is to grow 200 basis points above market. That is the reason why we are providing earlier than usual guidance for 2027, because we want to convey the confidence that we have in our future growth prospects. So we are conveying that we have visibility and we expect to get back to 200 basis points over market. As we get to this time next year, we will be able to provide a more specific guidance on 2027 growth.

Diron Smith: Okay. Thanks. And, you know, I noticed—

Peyman Khales: the end market, the table in your presentation. So to—

Diron Smith: clarify, is that the entire end market or just the areas that you are exposed to? Because, you know, I see electrophysiology; you have mid-teens. I think some market estimates still have the market growing high teens for that time period of 2025 to 2029. So I am just trying to understand if there is anything kind of, you know, anything specific—

Peyman Khales: to Integer Holdings Corporation in that—

Diron Smith: table. Thanks.

Peyman Khales: Yeah. The end market—we expect the end market to grow in the high teens, as you pointed out. In 2025, we expect the end market for EP to be in the high-teens to 20% range. And we expect that in 2026 to be kind of in the mid-teens. Okay.

Brett Adam Fishbin: But, you know, as far as—

Peyman Khales: the broad end markets, are you referring to just the broad end markets or the areas that we play in? The broad end market.

Diron Smith: Okay.

Operator: We will go next to Joanne Karen Wuensch at Citigroup. Good morning, and thank you so much for taking the question. Our questions—I will put them upfront. Since the third quarter, what has changed internally in how you think about running your business and communicating goals, etc., with the Street? And it is sort of in the public domain of activist involvement, and I am curious if that has had impact on how you think about goals and running the business. Thank you so much for taking the question.

Peyman Khales: Yes. Good morning, Joanne. Thank you for the question. So let me answer your question holistically. Because we believe in our strategy, we believe in how we run the business, our execution, the processes that we have, how we look after our customers, and how we have been able to deliver value for our shareholders—our confidence to be able to deliver value in a sustainable fashion for shareholders—we are not changing anything in our business because we believe in our strategy, and we believe in what we are doing. I think part of your question was about how we establish goals and expectations. How we issue guidance and come up with those forecasts, as we have mentioned before, has a very balanced view of what we believe we can deliver.

And then, of course, we look at the downside and the upside of that, and then collectively, we come up with what we think the expectations are. You are pointing out—I think what is implied in your question, Joanne—is the impact of the three new products that gives us some short-term headwinds. As we have mentioned before, that is unusual and that has to do with market adoption that really our customers were not expecting either. So that is an unusual event that we do not expect to continue. I think, just to go back to your second part of the question, we listen and talk to all of our shareholders. And we take their view into account, of course. But we are—and I am—a strong believer of our strategy and how we can deliver value for our shareholders.

Operator: Thank you very much. We will move next to Suraj Kalia at Oppenheimer.

Diron Smith: Damon—Diron. Can you hear me alright?

Peyman Khales: Yes. Good morning, Suraj. Gentlemen, thank you for all the comments on navigating these temporary headwinds—

Diron Smith: Darren, one question for you and Peyman one for you. I will pose them both upfront. So, Darren, I want to go back to your comments about—

Peyman Khales: not being able to—

Diron Smith: absorb fixed costs in Q1. Maybe you could give us some additional clarity on that, Darren. I presume you will have visibility six to nine months in advance. So the specific attribute about fixed cost not being absorbed—

Peyman Khales: kind of confused me. Any additional color would be great there.

Diron Smith: Peyman, for you, if I could pose this question—and I know this is a hypothetical, but I am just trying to connect some dots here. So let us say you have an ENT customer, Suraj Incorporated, that pulls their demand on a certain product.—

Andrew Harris Cooper: Right? You have to lower your manufacture—stop your—

Peyman Khales: manufacturing. Your sales go down. So on and so forth. Right?

Diron Smith: But for whatever reason, the end customer comes back and says, oops,—

Peyman Khales: I need to ramp back production of this new product. Does it require a new contract? Do you all have to switch manufacturing? Do you all keep spare inventory? I am just trying to connect some dots vis-à-vis, specifically, an ENT customer. Any color there would be great. Gentlemen, thank you for taking my questions. Well, thank you, Suraj, for the questions. Why do we not start with the question that you had for me, and then I will ask Diron to get back to your first question. So in terms of how it works, let me start with, just philosophically, Suraj. We work very closely with our customers. In recognition that, you know, we have talked about that the majority of our business is sole source and ultimately we see what the end market demand is.

So our customers work with us to give us a forecast based on their production plans. So whatever they have planned for their manufacturing facilities, we get some of those forecasts and orders months in advance because that is what they are planning. If something were to change, we, of course, work with them. So, you know, if they ask us to bring their forecast down, we work with them to do this in an orderly fashion. And what I mean by that is our customers recognize—because they also manufacture themselves—that you cannot stop a production. You cannot have a cliff. So they usually give us a ramp down, and we work with them collaboratively to see what makes sense so that, in the event—the hypothetical event—that you mentioned, that there would need to be a ramp down, we do this in an orderly fashion so that we do not cause a lot of inefficiencies.

And conversely, if you have to ramp back up, we do the same thing. Obviously, if you have to ramp back up quickly, there could be costs associated with that, and then we work with our customers. Again, we have a great partnership and relationship with our customers. We work with them. To your specific question about whether there is a new contract—no. We have general contracts with the majority, all of our large customers. We have mentioned before that approximately 70% of our business is under a long-term contract. And all the provisions are spelled out in that. We move with the speed of business. Every time something changes, we do not go and renegotiate a contract. Those things are already done. It is just a question of how we work with each other on a daily basis to make sure that both we, Integer Holdings Corporation, can meet the needs of our customers and our customers work with us so that we can make sure we run our businesses efficiently.

Diron Smith: Yeah. And, Suraj, just to maybe cover off on your question related to the fixed cost leverage. I think what you have to understand is that, as a manufacturing company, we have a certain level of capacity and case built out to deliver on our sales performance. So as you look at our sales level in fourth quarter and the sequential movement from 2025 to 2026, you will see a lower sales number, and that still has to absorb the full fixed cost used to deliver on the higher sales number. So this is one of the reasons that we always talk about Integer Holdings Corporation as a company that needs to be looked at on more of a rolling four-quarter basis because you do have that inter-quarter variability that you may have with sales, with a little bit more fixed cost leverage at times, a little bit less in other quarters.

And so when you think about our guidance for the year, that is where you will see that the operating margin is not as impacted on the full-year basis in our guidance as, let us say, one quarter is, where we have the lowest sales for the quarter. Thank you.

Andrew Harris Cooper: Mhmm.

Operator: Thank you again for joining us today. You can access the replay of this call as well as the presentation on Integer Holdings Corporation’s investor website at integer.net. This concludes today’s conference call. You may now disconnect.