Strategic Execution and Portfolio Dynamics – Management is intentionally prioritizing commercial channel quality and long-term value creation over ‘growth at all costs,’ leading to a disciplined evaluation of smaller distributors. – Spine Fixation performance is bifurcated, with…
e top 30 distributors (80% of sales) performing well while smaller distributors face productivity challenges and potential consolidation or exits. – Biologics showed significant stabilization, moving from double-digit declines in 2025 to approximately flat year-over-year performance, driven by improved account engagement and utilization. – Therapeutic Solutions demonstrated resilience despite temporary reimbursement pressure, benefiting from steady demand and a strong margin profile. – Global Limb Reconstruction growth is currently driven by international momentum, while U.S. performance is constrained by the ongoing build-out of commercial infrastructure. – The company is shifting its investment thesis to focus on asset utilization, refusing to increase cash spending on ‘bad revenue’ from underperforming smaller distributor shops. Outlook and Strategic Initiatives – Full-year 2026 guidance assumes a $15 million incremental benefit from a strategic European distributor arrangement, though this creates a projected $22 million headwind for 2027. – Management expects challenges with smaller U.S. spine distributors to persist through the balance of the year, impacting core growth rates in the second half. – The restoration of Medicare reimbursement for bone growth stimulators is expected to remove a meaningful headwind and improve visibility for the Therapeutic Solutions business. – Strategic investments are being directed toward clinical evidence generation for OsteoCove and Virtuos, and a new IDE submission for diabetic foot ulcer applications in Limb Reconstruction. – Q4 sequential growth is expected to be primarily driven by the timing of European inventory purchases and normal seasonal