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Well thank you for everyone for joining I'm John Young I'm one of Canaccord's MedTech analysts and we're thrilled to host Merit Medical. With us today is CFO Rahul Parra and Travis McDougal, Executive VP of Corporate Finance and Treasury. The company recently announced strong Q2 results and raised fiscal 2026 guidance so let's jump into it. Rahul, CGI it wraps up the end of this year and Merit's clearly tracking towards the 5% to 7% organic CAGR revenue, the 20% to 22% margin, and the $400 million plus of cumulative free cash flow, especially the latter, you pretty much already almost hit. I know you said you're neck deep in the next strategic plan, which I think investors are going to like, knowing you're going to be issuing another one. Without pre-announcing numbers, how should investors just think about the shape of the next plan and the timing of when you'll share it? Yeah, it's a great question, and thank you. And as we mentioned on the earnings call, obviously hyper-focused on making sure that we execute on CGI, right? Football season is upon us, we don't wanna drop the football on the one yard line. And so just everybody's marching to make sure we execute those goals. And look, I think the way the CEO transition happened, I think it was done in a perfect way where Martha had one year left on CGI essentially about a year and a half or a year a quarter when she came on. That allowed her to kind of get around, visit all the sites and then work with us, you know, on the, on the strategic planning. And so we're, you Know, obviously, you know, going through that. So I'd say it's a little premature right now to kind of tell you kind of what that looks like, other than to say, like, you Know, we're super excited about executing on CGI. And we think we've got, you Know, we've done a lot of great work with Martha. And I think we'll have a good game plan, you Know, for the next three years that you know we're we'll be excited to share as far as when we share it. Foundations for Growth, I think we did in November of the year right before we started the program. CGI, we did it on our fourth quarter call. So I think ideally we'd like to kind of stick to the fourth quarter call, but we're also asking those questions. Should we do it sooner or when should we do It? But I think everybody right now is hyper-focused on CGI. Got it. How should we think of the anchoring to the three targets that you previously used the past two LRPs? Do you think you're continue using those three targets for this next one that you're contemplating currently? Again, you know, not to be vague, but we're, you know, we're focused on that, too, right? You know, do those targets, you know, continue to make sense? And, you know, they've worked well for us. I don't think anybody's arguing that, but, you know, it's a good time to just kind of question everything, right, and so that's what we're doing. Got it. The Q2 call, a lot of it was spent on portfolio review. You really went in-depth there and talked about it, leaving, you know, no stone unturned. How should we think about what's core to merit today as the company evolves now with Martha being at the helm is could we see more meaningful divestitures in the future beyond what you guys have done so far of like dual cap for example yeah I mean look I think it's the natural kind of planning process of when you're reviewing your strategic plan right and I obviously you guys are getting a lot more access to the platforms you know that's kind of how we're running the business and so really kind of just diving deep into each each platform and really understanding like you know where do we win you know one needs to be better uh what's executing you know at a very high level how do we want you know how do we keep that going um and then what doesn't make sense you know as as you guys know you know over time we've kind of put this portfolio together um if you see kind of where the acquisitions are are you know uh we're doing the the acquisations you know from a platform level it's basically almost every single one of them right i mean we've uh invested in oncology um you know our endotech you know, our endoscopy, I guess I should say, um, uh, renal therapies, um access. And so, you know the list kind of goes on. And so you know I think we've got a really good portfolio right now. We're in really good markets, um and procedures and call points. Um, and now it's just about finding the stuff that we're not really good at and you know what does that make sense. I'm not sure that we have like a size or you know of you know you know that that we're looking at, but there is definitely things that we can prune. A lot of what you know very very similar fashion to what you've seen under Foundations for Growth and CGI. Got it. Right? I mean, I, I think it's, it's really just very strategic and surgical in the way we do. Yeah. I know, you know, under the past two plans, obviously one's still ongoing, a lot of it's been more skew rationalization. Yeah. I know you've talked a lot at length about that. Does this signal though that this is going to be something beyond that where it's really like a, a sale of maybe a number of products lines or anything along those lines? I was trying to figure out how to read into it. Yeah, I I think its early to tell, right? I mean, look, obviously we did the dual cap one, right? And a smaller asset, you know, I think there's, you know, small assets like that. And again, I like to, you know, explain it more as a surgical kind of process, right? We're not talking large dollars. We're talking kind of very strategic components and pieces that just are right outside our call point that maybe don't make sense. That's right. So, yeah. Operating margin per minute, you've delivered 850 bps. You pointed close to 950 bps if you hit the a high end of this year's guidance. We're very familiar with the Merit kitchen sink. We've joked about that a little bit. Just, you know, pricing, mix, facility moves, freight, automation. What does the next leg of margin expansion come from as the wins get incrementally harder? Yeah, look, you know I do joke about the kitchen sink cause I have no better way of explaining it, right? So if anybody has, you a different, you know, name for it or, you know, a description of it, you know, more than happy to cause I'm also getting kind of sick of it to be honest but uh i i think it does describe it you know the best way because it we really are just hyper focused on everything right and i i i like to say and i've started saying that i think we'll perpetually be in the seventh inning right so like you know obviously the heavy lifting you know those you know first six innings we kind of got through them under foundations for growth and to a certain extent cgi and now it's just about applying all the things we've learned and just you know kind of being consistent with them so you know when you look at the operating margin, you know, yeah, look, we still think, you know, you know, that we can have, you know, pricing, right, that we can still focus on mix, you know, new product introduction, acquisitions, those also can help on the gross margin side. Operationally, you can be, you know, better, you can still continue to transfer stuff to lower cost areas like we've done for the last 10 years. You know, you can continue to, you know, automate, you can continue to be more efficient, you know, at the kind of the plant level, so, and, you know, and just the people level, too. And raw materials you can attack, you get more scale, the bigger you get, the better you are. So we really wanna look at everything, logistics. Modes and nodes. Yeah, yeah, exactly. So, and that is what kind of, one, prevents leakage, right? So historically we would say, hey, you know what, this year we're gonna focus on price. And so everybody does really good on price or mix. And then you look back and you're like, well, wait a minute, our operations group just gave it away because they weren't as efficient, right? Or the opposite, like, hey, we moved something down to Tijuana and our sales force was like, oh, they just gave the cost savings away. So when you focus on the entire kind of piece, you see the kind of incremental gross margin improvements, which obviously lead to operating margin improvements that you've seen from us. But I think there's still more to be had. Again, we'll perpetually be in that seventh ending, just kind of, you know, finding, you know, the areas to improve. Any updated thoughts on just capital allocation and M&A? How should we think about the pipeline of tuck-in M&E and maybe what parts of the merit portfolio today you think could benefit from further tuck-ins? Well, I think it's all dependent on what's out there, right? But I think if you look at the platforms that we currently have, you know, I, I don't know, you don't know, but I think we're, we're really interested in, in, you know, in any one of those, right. I mean, I think we have the right, you know, areas and we just want to make sure that we're, I guess, going deeper in the bags that we already play in. So from a capital allocation standpoint, I don't think you'll see much of a change. Obviously, stock buybacks are a pretty big discussion point right now, especially when MedTech was down as much as it was, say, three months ago. The discussions were definitely taking place. And quite frankly, they're just part of strategic planning, right? What is our capital allocation policy? What's our capital strategy for the next few years? We're just neck deep in understanding all that stuff. Got it. Q2 was the strongest organic growth in three years at 9% and you had 22.6% non-GAAP operating margin. You did call out some variables with the OEM rebound and also the Reno recall resolution, maybe some stocking as well. How should we think about the genuine demand or a clean run rate in the quarter versus some catch up that may have happened? Well, I mean, I think you just should look at our yearly guidance, right? And what we gave there. I mean, I think that's, you know, that's really what we're shooting for. I think, you know, when you look at Q1, we still felt it was a strong quarter, even though the, you know revenue growth seemed a little bit light, but we did call out OEM, we did call out the recall, and you know when you adjusted for those items, the underlying business was doing great, and so the second quarter really didn't surprise us, especially as those things kind of, you know, the OEM fixed or rebounded, and then we, you know, got the recalls essentially behind us. So I would just point you to our revenue guidance. I think that's a good barometer of where we think we'll end the year and hopefully we can do better than that. Awesome, yeah. And maybe on guidance, so you've lifted organic growth to 6.9% to 7.5%. EPS to 425 to 435, essentially the first half beat, but you left some of the back half unchanged. You look at it, where do you think about setting the bar? And can you maybe just talk about any dynamics you're seeing now in Q3 beyond any usual summer seasonality that usually you guys experience? Yeah, nothing out of the ordinary, right? I mean, I think demand continues to be as expected. We're not seeing any softness, like I know some people were concerned about procedure volumes. We're seeing any of that. We continually check with our sales force and they're not seen it, so that's a positive sign. So other than normal seasonality, I wouldn't call anything out. I do want to double click on the softness too. I know we've heard it from some of the hospital players, really not, you know, a couple of med tech strategics, but really more on the hospital side. I know Merit does a really good job of touching, you know lots of avenues of healthcare. What do you expect there if hospitals continue to remain under pressure with ACA subsidies? Do you expect that to eventually hit the med tech sector overall? I know you guys have experienced this in the past too, so I'd just love to hear your views there. Yeah, I mean, I'm not sure that everybody's gonna be immune to it, right? I mean I think when we look at the value that we bring, and really the ASP of the products that we sell, right, I mean it's pretty low. We're not like the big kind of therapeutic driver, which is I think where really you'll see more of the impact. For us, you're gonna need access products, you're going to need delivery devices, you're getting any closure devices. And, you know, I think when you look at our average ASP, which is what, somewhere around nine bucks, you know we're really not that big of a cost factor in the whole system. But, you now, obviously it is important for us to prove our value to the systems. And I think given our broad product portfolio and our vertical integration and our quality, I think we can, our Salesforce does a really good job of selling that and making sure that the systems that we sell into, understand the value that we bring. Great, I think we may move to some of the segments. Scout and then the recent OneMark acquisition, they've been a pretty exciting near-term catalyst. OneMark from Viewpoint, the acquisition expands your TAN to about 1.3 by reaching lower risk biopsies. And you've also announced on the Q2 call about the Scout MD launch in late May. How is the commercial launch tracking and how does the cross-sell actually work in the field between the two technologies as we think about the ramp into next year? One second. Why not? We view this as the continuum of the patient pathway here, right? So what that 1.3 does is it allows us to engage with physicians earlier in the process. And so we're really happy with that. You know, the other thing that you consider is down the road in the MD space, that's more suspicious lesions, more technical cases and whatnot. So, yes, there is some cannibalization that occurred. We factored it in when we guided, but the reality is we view this as a continuum of care throughout the patient journey, and it's been very nice for us. We're very happy with it, and we look forward to the one mark going forward. Yeah, I mean, our sales force is excited, right? You guys know they were a single kind of product sales force, and to have something else that they can sell earlier, as Travis said, in the process really helps. And if you kind of think about what this product brings is we had essentially a punch list of customers that had said, you know what, in this procedure or this kind of diagnosis, it probably doesn't make sense to use the Scout system. It might be too price, the price points might be a little high. And now we have something that's lower cost that they can get into, and that's why it increases the TAM. So, you know, so again, really excited about it. And, you know, I know our sales force is really, really excited about it, too. And the integration is going great. Is it really like a better best kind of like strategy and pricing point positions to positions? Yeah. Are positions like the same position using both then essentially is how we should think Yeah, they could, right? They could be in a procedure where it just doesn't make sense, right. It's a low risk procedure. They don't really want to use the scout system because it might be a little bit, you know, too high of a price, you know, for that, you know. And so, you That's where essentially viewpoint comes in and it makes a difference. Place it at the time of biopsy, right? Yep. Nice feature to it. Endoscopy, it grew 29% year over year. Is this acceleration that we've been seeing durable, or is this more of the integration driving this still? Well, look, I think the hope is that it can be more durable, right. I mean, look I never promised those type of growth races, you know me. But, you know, I would say that I think, you know, we're excited about how, you know, how not only the acquired products are doing, but also, you know, you know, product introductions. And so, you know, I think we're seeing, you know, a combination of both kind of deliver the growth there. And as you guys know, like, we've spent a long time trying to find assets, you know, that made sense in our endoscopy segment. And, you know, finding, you know, a couple of, you know, solid assets that our sales force is excited about, they're still kind of trying to integrate that right and and and really get the benefit of it but we feel like we've made the right investments uh we've acquired products we've launched new r&d products and i think you know um you know hopefully we start to see the benefits of you know of those investments well that's also the same concept where it's the continuum of care right so the the the acquisition we made several years ago with the esophagus product that's a tree gird right and then you go down the pathway then you get to the barrett's esophagous that's the c2 product and then you get further down the pathway, that's our legacy merit business. So it's this concept that Ralph talked about of getting deeper into the call points and deeper into the procedures. Make sense? OEM, it's been a bit of a focus too. It rebounded both by new customer agreements and stocking. What gives you confidence in the second half guidance of mid to high single-digit growth for that segment? Well, I think just the underlying business. I mean, I think the second quarter was a strong, you know, strong OEM results. You know, it It was broad-based and balanced, I would say, not only with the new agreement that we had recently signed with a new customer. We were able to deliver some product there. As we look into the second half of the year, we know we have more product to deliver to that customer. And just given the broad-base kind of beat within OEM, we feel pretty confident in that momentum that they have. Got it. I do have to ask on Rhapsody. I think we're contractually obligated. I know you reiterated the $7 million target for this year. what does the multi-year trajectory for Rhapsody look like? And will it be carved out in the next LRP? No. No, look, I think if you remember when we launched CGI, we weren't sure as to when the approval for the US launch of the Rhapsod would happen, right? And so obviously we made an effort to say, look, we know that as we stand today, we feel confident in a five to 7% CAGR. When Rhapsody launches, we will call out what the U.S. component is so that you guys can adjust for it. And so once we get through CGI, we just feel like it's kind of part of the business. Obviously, if it's a growth driver, you guys will hear it, but other than that, it's really, it'll fall back into kind of the other, the way we just typically talk about the business at the platform level. Got it, and I know you've really described Rhapsdy as a platform product. When could we see maybe some future R&D projects coming out based on this for other use cases or other areas? Yeah, well look, I think we're quick learners, right? I mean, I started talking about Rhapsody maybe a little bit too early, and I think it was a lesson learned. I think, you know, we'll wait until we have to talk about the products before we start talking about them, but there is stuff being worked on, and I once we get closer to approval we understand pricing and all the dynamics and things that we kind of tripped on, we'll start talking more about it. Great. I just want to see if there are any questions from the audience. I know Bill's in the audience and loves a good heckle, but no. Maybe just as we close out then here, just as you finish CGI and you set up the next chapter for Merit, what's the one thing that you want this room to take away for where the company's headed over the next three years? Well, look, I think, you know, you know, I think the focus of the executive team and with Martha's leadership, you know, I think we're excited about what we can deliver. You know, I think it's very rare for a company to announce, at least that's what I tell myself, you know you guys can correct me, but you know to announce two LRPs and execute on them. And we did it in the face of COVID, you know supply chain shortages, you know conflict, all sorts of, you know whatever happens in the know whatever's happened in the last five and a half years um and we've we've been able to execute so i think as we um you know meet as an executive team um you know the martha's leadership style does you know you know uh you know come with some level of consensus obviously and and input from the rest of the executive team i you know we know at merit you know the type of leadership and executives that we have we haven't done a good job of showcasing those i think people have historically just thought of merit as kind of fred But you know, there's a whole team of people that are behind it and we're excited to kind of showcase what we can do And own kind of the ultimate kind of strategic plan And so, you know We're excited show it you know show you guys what we come up with and you know on And the goal is to execute on it, you if not beat it great. Yeah, well Travis. Thanks so much for joining us today Thank you guys. Appreciate it. Yeah