Medical technology company Teleflex (NYSE: TFX) met Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 5% year on year to $700.7 million. Its non-GAAP profit of $2.91 per share was 0.9% above analysts’ consensus estimates.
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Teleflex (TFX) Q1 CY2025 Highlights:
- Revenue: $700.7 million vs analyst estimates of $699 million (5% year-on-year decline, in line)
- Adjusted EPS: $2.91 vs analyst estimates of $2.88 (0.9% beat)
- Adjusted EBITDA: $200 million vs analyst estimates of $189.4 million (28.5% margin, 5.6% beat)
- Adjusted EPS guidance for the full year is $13.40 at the midpoint, missing analyst estimates by 4.9%
- Operating Margin: 17.9%, up from -0.6% in the same quarter last year
- Free Cash Flow Margin: 6.2%, down from 10.1% in the same quarter last year
- Constant Currency Revenue fell 3.8% year on year (3.8% in the same quarter last year)
- Market Capitalization: $5.6 billion
StockStory’s Take
Teleflex’s first quarter performance reflected ongoing challenges in several business lines, as management cited lower demand in its OEM and Interventional Urology segments, as well as the impact of volume-based procurement in China. CEO Liam Kelly noted that Vascular Access and Interventional product lines showed year-over-year growth, with double-digit gains in peripherally inserted central catheters (PICCs) and intra-aortic balloon pumps in the Americas. He also pointed to strong early demand for new products like the AC3 range Intra-Aortic Balloon Pump following recent FDA clearance.
Looking ahead, management revised its full-year adjusted EPS guidance downward, driven by $55 million in new tariffs and persistent macroeconomic pressures on costs. CFO John Deren described multiple mitigation efforts, including optimizing the supply chain, leveraging trade exemptions, and selective pricing increases. Still, Deren acknowledged that, “the current tariff environment is disappointing,” and said most mitigation strategies would take time to impact results, leaving near-term profitability below initial expectations.
Key Insights from Management’s Remarks
Teleflex’s management addressed a mix of operational headwinds, strategic transactions, and product pipeline updates that impacted first quarter results and will influence the business going forward.
- OEM and UroLift Weakness: The largest revenue declines stemmed from the OEM segment due to lost customer contracts and inventory management, and continued pressure on UroLift in Interventional Urology, especially in U.S. office settings. Management expects sequential improvement in OEM orders throughout the year as contract anniversaries pass.
- China Procurement and Regional Volatility: Revenue in Asia fell due to volume-based procurement initiatives in China, which led to significant destocking. CEO Liam Kelly expects China and broader Asia Pacific to recover gradually in coming quarters as these effects abate.
- Vascular Access and Interventional Growth: Vascular Access saw double-digit growth in PICCs and continued strength in EZ-IO, while Interventional benefited from robust demand for intra-aortic balloon pumps in the Americas and new product launches like the AC3 range, which recently received FDA clearance.
- Product Pipeline Advancements: Management highlighted positive preliminary clinical results for the Ringer Perfusion Balloon Catheter and the expanded indication for QuikClot Control+, which increases its addressable market in the U.S. by over $150 million.
- Separation and M&A Activity: Teleflex is progressing with plans to separate into two companies and to acquire BIOTRONIK’s Vascular Intervention business. Management reported strong inbound interest in the potential NewCo spinoff or sale, with a parallel process underway to maximize shareholder value.
Drivers of Future Performance
Teleflex’s outlook for the remainder of the year is shaped by efforts to offset cost pressures, evolving product mix, and the impact of global trade policies.
- Tariff Headwinds and Mitigation: The company faces $55 million in tariff costs for 2025, with management pursuing mitigation strategies including supply chain reconfiguration, maximizing USMCA exemptions, and targeted price increases. CFO John Deren confirmed that most tariff impacts will be felt in the second half of the year.
- Product Launches and Integration: The successful launch and commercialization of new products, particularly within the Interventional business, and the integration of BIOTRONIK’s portfolio are expected to support revenue growth and margin stability.
- Strategic Separation Process: Execution of the planned business separation, and the potential sale of NewCo, will be a major focus. Management believes this will enable more targeted growth strategies and streamlined capital allocation, but short-term disruption is possible during the transition.
Top Analyst Questions
- Patrick Wood (Morgan Stanley): Asked about OEM demand trends amid supply chain shifts and long-term focus on vascular intervention. Management expects OEM demand to improve and is prioritizing cath lab presence post-BIOTRONIK acquisition.
- Michael Sarcone (Jefferies): Probed on timing and effectiveness of tariff mitigation strategies. CFO John Deren detailed actions underway but stressed most benefits will take time to materialize.
- Jayson Bedford (Raymond James): Inquired if Teleflex would consider selling parts of NewCo or only the entire business. CEO Liam Kelly said all options are being evaluated to maximize shareholder value.
- Craig Bijou (Bank of America): Sought updates on Interventional Urology—specifically UroLift and Palette performance. Management confirmed Palette’s strong double-digit growth and ongoing UroLift headwinds, especially in the U.S.
- Anthony Petrone (Mizuho): Requested details on BIOTRONIK integration and expected revenue synergies. CEO Liam Kelly emphasized leveraging complementary sales channels in the Americas and EMEA, and highlighted R&D and clinical trial opportunities.
Catalysts in Upcoming Quarters
In the next few quarters, the StockStory team will monitor (1) the pace of OEM and China business recovery as contract and procurement headwinds subside, (2) the impact and effectiveness of tariff mitigation strategies on margins, and (3) the BIOTRONIK acquisition’s integration progress and new product commercialization. Execution of the proposed business separation and clarity on the outcome of the NewCo sale or spin-off process will also be key focus areas.
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