Teleflex Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 09:02
Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Teleflex Incorporated ("we," "us," "our" and "Teleflex") is a global provider of medical technology products focused on enhancing clinical benefits, improving patient and provider safety and reducing total procedural costs. We primarily design, develop, manufacture and supply single-use medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications. We market and sell our products worldwide through a combination of our direct sales force and distributors. Because our products are used in numerous markets and for a variety of procedures, we are not dependent upon any one end-market or procedure. We are focused on achieving consistent, sustainable and profitable growth by increasing our market share and improving our operating efficiencies.
We evaluate our portfolio of products and businesses on an ongoing basis to ensure alignment with our overall objectives. Based on our evaluation, we may identify opportunities to divest businesses and product lines that do not meet our objectives. In addition, we may seek to optimize utilization of our facilities through restructuring initiatives designed to further improve our cost structure and enhance our competitive position. We also may continue to explore opportunities to expand the size of our business and improve operating margins through a combination of acquisitions and distributor to direct sales conversions, which generally involve our elimination of a distributor from the sales channel, either by acquiring the distributor or terminating the distributor relationship (in some instances, particularly in Asia, the conversions involve our acquisition or termination of a master distributor and the continued sale of our products through sub-distributors or through new distributors). Distributor to direct sales conversions are designed to facilitate improved product pricing and more direct access to the end users of our products within the sales channel.
Acquisition of BIOTRONIK Vascular Intervention business
On February 24, 2025, we executed a definitive agreement to acquire substantially all of the Vascular Intervention business of BIOTRONIK SE & Co. KG (the "VI Business"). The acquisition adds a broad suite of coronary and peripheral medical devices, such as drug-coated balloons, stents, and balloon catheters, which complements our interventional product portfolio.
On June 30, 2025, the first day of the third fiscal quarter of 2025, we completed the acquisition of the VI Business for a net initial cash payment of €704.3 million, or $825.2 million, subject to certain working capital and other customary adjustments. Borrowings under the delayed draw term loan, discussed in Note 8 and within the Liquidity and Capital Resources section below, and our revolving credit facility were utilized to finance the acquisition, inclusive of transaction-related costs and other associated requirements.
Concurrent with the execution of the agreement to acquire the VI Business, we entered into foreign exchange derivative contracts with an aggregate notional value of €700 million to hedge economically against the foreign currency exposure associated with the cash consideration needed to complete the acquisition. These forward contracts were settled on June 30, 2025, concurrent with the completion of our acquisition. The settlement of the forward currency contracts resulted in proceeds of $82.2 million.
In connection with the acquisition, we also entered into several ancillary agreements with BIOTRONIK SE & Co. KG to help facilitate business continuity and the integration of the business. These agreements primarily relate to transition support and distribution services and have varying durations extending up to 36 months.
For additional information regarding the acquisition of the VI Business, refer to Note 4 within the condensed consolidated financial statements included in this report.
Recently Announced Strategic Actions
On February 27, 2025, we announced our strategic decision to separate into two independent companies. One company will comprise our Vascular Access product category, most of our products within our Interventional Access and Surgical product categories and the VI Business and will remain with Teleflex. The second company will comprise our Acute Care (consisting of our Urology and Respiratory product categories, the majority of our Anesthesia product category and certain products within our Interventional Access and Surgical product categories), our Interventional Urology and OEM businesses (referred to collectively as "NewCo"). Since announcing the intended separation, we have received a number of inbound expressions of interest in acquiring NewCo and, with oversight of the Board, we continue to actively advance the process for a potential sale of NewCo, which has
become our primary focus. There can be no guarantees that the proposed separation will be completed on the terms and within the timeframe we announced, or at all.
Impairment considerations
As previously disclosed, our Interventional Urology North America ("IU reporting unit") has been at risk of impairment since we recognized a goodwill impairment charge for the year ended December 31, 2024 and, as a result, we have been monitoring our IU reporting unit for a potential additional goodwill impairment. During the third quarter of 2025, utilizing various inputs such as the latest business outlook and recent fair value indicators, we determined that there was a deterioration in market and business conditions which resulted in the identification of a triggering event. As a result, in connection with the preparation of the financial statements for the three months ended September 28, 2025, we performed an impairment assessment and determined that the carrying value of the IU reporting unit exceeded its fair value. Consequently, we recognized a goodwill impairment charge of $403.9 million in the Condensed Consolidated Statements of Income for the three months ended September 28, 2025. As of September 28, 2025, there is no remaining goodwill related to the IU reporting unit.
We estimated the fair value of the reporting unit using a market approach, supplemented by an income approach, to validate and support the analysis. The impairment charge was largely driven by unfavorable changes in key assumptions utilized to estimate fair value, relative to our 2024 valuation, specifically, lower market multiples, higher stand-alone operating costs and lower revenue growth.
We test the recoverability of long-lived assets whenever events or circumstances indicate the carrying value of an asset may not be recoverable. During the first quarter of 2025, we identified indicators of a potential impairment related to the long-lived assets associated with our Titan SGS asset group, which primarily consists of intangible assets. The indicators of a potential impairment primarily arose from lower than expected sales of our Titan SGS product line and anticipated continuing reduced demand for bariatric surgery procedures in future periods, driven by the growing adoption of GLP-1 products. We performed a recoverability test, utilizing an updated long-term forecast reflecting higher uncertainty of revenue growth in future periods compared to previous estimates, and concluded that the undiscounted cash flows of the Titan SGS product line exceeded the carrying value of the related assets by approximately 10%. Accordingly, no impairment was recognized during the three months ended March 29, 2025 related to the Titan SGS asset group. During the second quarter of 2025, the Titan SGS product line performed largely in line with the forecast used in the first quarter 2025 recoverability test.
During the third quarter of 2025, we identified additional indicators of a potential impairment related to the Titan SGS asset group due to lower than expected sales growth during the period and a further downward revision to sales forecasts compared to the forecast utilized in our first quarter 2025 impairment analysis. As a result, in connection with the preparation of the financial statements for the three months ended September 28, 2025, we performed a recoverability test and as a result, we determined that the carrying value of the asset group was not fully recoverable. We subsequently recognized an impairment charge of $100.0 million, representing the amount by which the carrying value of the asset group exceeded its estimated fair value, as determined utilizing the income approach. After the recognition of the impairment charge, the carrying value of the intangible assets of the Titan SGS asset group was $25.1 million. Despite the downward revision to sales forecasts, we continue to anticipate revenue growth from the Titan SGS asset group in future periods.
Tariffs
Our global operations are subject to risks associated with international trade policies, and we continue to closely monitor developments in trade relations and policy, including tariffs. The recently enacted U.S. tariffs and accompanying retaliatory measures, had a negative impact on our gross margins and cash flows for the three and nine months ended September 28, 2025. The impact was primarily driven by higher import costs linked to our operations in the European Union, as well as to products manufactured in Mexico that are not currently compliant with the United States-Mexico-Canada Agreement (USMCA). We are currently evaluating options to mitigate our exposure through supply chain optimization strategies, including modifications to chain of custody protocols and increasing the proportion of products compliant with the USMCA in our portfolio, in addition to customer pricing. Additional changes to proposed and enacted tariffs could have a material impact on our business and we may experience a material negative impact on our gross margins and cash flows in future periods. The ultimate impact of changes to tariffs and trade policies on our results from operations and cash flows will depend on several factors, including the timing, scale, scope, and nature of any tariffs or policies that are implemented, and any associated retaliatory measures.
Italian payback measure
In 2015, the Italian parliament enacted legislation that, among other things, imposed a "payback" measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. In response to decrees issued by the Italian Ministry of Health, the various Italian regions issued invoices to medical device companies, including Teleflex, under the payback measure in the fourth quarter of 2022 seeking payment with respect to excess expenditures for the years 2015 through 2018. Following the issuance of the invoices, we and numerous other medical device companies filed appeals with the Italian administrative courts challenging the enforceability of the payback measure, primarily on the basis that the law was unconstitutional. The Italian administrative courts referred the question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional. In August 2025, the Italian parliament enacted a modification to the previously enacted legislation that reduced the payment amounts due from the affected companies, including Teleflex, to approximately 25% of the amounts originally invoiced for the years 2015 through 2018. Payment of the reduced amount precludes the pursuit of further legal action related to the obligation to pay the amounts relating to such years. During the third quarter of 2025, we remitted payment to the related regions to settle the years 2015 through 2018. As a result of the modification in the legislation, along with an adjustment to our calculation of the reserves related to years 2019 through 2025, we recognized a $23.7 million decrease in our reserve (and corresponding increase to revenue for the three and nine months ended September 28, 2025), of which $20.1 million pertains to prior periods. As of September 28, 2025, our reserve related to this matter was $18.3 million.
Results of Operations
As used in this discussion, "new products" are products for which commercial sales have commenced within the past 36 months, and "existing products" are products for which commercial sales commenced more than 36 months ago. Discussion of results of operations items that reference the effect of one or more acquired and/or divested businesses or assets (except as noted below with respect to acquired distributors) generally reflects the impact of the acquisitions and/or divestitures within the first 12 months following the date of the acquisition and/or divestiture. In addition to increases and decreases in the per unit selling prices of our products to our customers, our discussion of the impact of product price increases and decreases also reflects the impact on the pricing of our products resulting from the elimination of the distributor, either through acquisition or termination of the distributor, from the sales channel. All of the dollar amounts in the tables are presented in millions unless otherwise noted.
Certain financial information is presented on a rounded basis, which may cause minor differences.
Net revenues
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Net revenues | $ | 913.0 | $ | 764.4 | $ | 2,394.6 | $ | 2,251.9 | |||||||||||||||
Net revenues for the three months ended September 28, 2025 increased $148.6 million, or 19.4%, compared to the prior year period, primarily due to net revenues of $101.8 million generated by the acquired VI Business, the $23.7 million favorable impact from a decrease in our reserves related to the Italian payback measure, $10.0 million of favorable fluctuations in foreign currency exchange rates and a $9.4 million favorable impact from a stocking order in China related to recently implemented initiatives intended to expand the sales channel of intra-aortic balloon pumps and catheters.
Net revenues for the nine months ended September 28, 2025 increased $142.7 million, or 6.3%, compared to the prior year period, primarily due to net revenues of $101.8 million generated by the acquired VI Business, a $39.5 million net favorable impact from adjustments to our reserves related to the Italian payback measure, driven by the $23.7 million favorable adjustment recognized in the current period compared to an unfavorable adjustment of $15.8 million in the prior period. The increases in net revenues were also impacted by a $26.4 million increase in sales of new products, $9.5 million of favorable fluctuations in foreign currency exchange rates, and a $9.4 million favorable impact from a stocking order in China related to recently implemented initiatives intended to expand the sales channel of intra-aortic balloon pumps and catheters. The increases in net revenues were partially offset by a $47.6 million decrease in sales volumes of existing products, primarily driven by declines in sales related to our OEM product category and UroLift product line.
Gross profit
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Gross profit | $ | 451.6 | $ | 430.2 | $ | 1,272.2 | $ | 1,262.8 | |||||||||||||||
| Percentage of sales | 49.5 | % | 56.3 | % | 53.1 | % | 56.1 | % | |||||||||||||||
Gross margin for the three months ended September 28, 2025 decreased 680 basis points, or 12.1%, compared to the prior year period, primarily due to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, the adverse impact from recently enacted tariffs, unfavorable fluctuations in foreign currency exchange rates and an increase in logistics and distribution costs. The decreases in gross margin were partially offset by the favorable impact from a decrease in our reserves related to the Italian payback measure.
Gross margin for the nine months ended September 28, 2025 decreased 300 basis points, or 5.3%, compared to the prior year period, primarily due to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, the adverse impact from recently enacted tariffs, an increase in logistics and distribution costs and continued cost inflation from macro-economic factors, specifically with respect to labor and raw materials. The decreases in gross margin were partially offset by the net favorable impact of adjustments to our reserves related to the Italian payback measure.
Selling, general and administrative
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Selling, general and administrative | $ | 281.8 | $ | 247.3 | $ | 719.6 | $ | 740.7 | |||||||||||||||
| Percentage of sales | 30.9 | % | 32.4 | % | 30.1 | % | 32.9 | % | |||||||||||||||
Selling, general and administrative expenses for the three months ended September 28, 2025 increased $34.5 million compared to the prior year period, which was primarily attributable to $35.2 million in operating costs incurred by the acquired VI Business and amortization of intangible assets recognized in connection with the VI Business acquisition, partially offset by a decrease in sales and marketing expenses related to our legacy businesses.
Selling, general and administrative expenses for the nine months ended September 28, 2025 decreased $21.1 million compared to the prior year period, which was primarily attributable to an $82.2 million benefit from non-designated foreign currency forward contracts designed to hedge against the cash consideration for the VI Business and a decrease in sales and marketing expenses related to our legacy businesses. The decreases in selling, general and administrative expenses were partially offset by $35.2 million in operating costs incurred by the acquired VI Business, amortization of intangible assets recognized in connection with the VI Business acquisition and increases in the estimated fair value of our contingent consideration liabilities.
Research and development
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Research and development | $ | 57.2 | $ | 38.7 | $ | 132.2 | $ | 117.1 | |||||||||||||||
| Percentage of sales | 6.3 | % | 5.1 | % | 5.5 | % | 5.2 | % | |||||||||||||||
The increase in research and development expense for the three months ended September 28, 2025 compared to the prior year period, was primarily attributable to expenses incurred by the acquired VI Business.
The increase in research and development expenses for the nine months ended September 28, 2025 compared to the prior year period was primarily attributable to expenses incurred by the acquired VI Business, partially offset by lower European Union Medical Device Regulation related costs.
Pension Settlement Charge
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Pension settlement (benefit) charge | $ | - | $ | (5.4) | $ | - | $ | 132.7 | |||||||||||||||
For the nine months ended September 29, 2024, we recognized a settlement charge of $132.7 million related to our plan to terminate the TRIP resulting from our purchase of a group annuity contract to provide participants, beneficiaries, and alternate payees the full value of their benefit under the plan. For the three months ended September 29, 2024, we finalized the premiums owed for the group annuity contract, which resulted in a refund of pension trust assets and a corresponding reduction to the settlement charge of $5.4 million.
Goodwill impairment charge
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
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Goodwill impairment charge
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$ | 403.9 | $ | - | $ | 403.9 | $ | - | |||||||||||||||
During the three and nine months ended September 29, 2025, we recognized a goodwill impairment charge of $403.9 million related to our IU reporting unit. For additional information, refer to Note 7 within the condensed consolidated financial statements included in this report.
Restructuring charges, separation costs and other impairment charges
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Restructuring charges, separation costs and other impairment charges | $ | 117.6 | $ | 0.3 | $ | 144.6 | $ | 10.8 | |||||||||||||||
Restructuring charges, separation costs and impairment charges for the three months ended September 28, 2025 primarily consisted of impairment charges of $100.0 million related to our Titan SGS asset group and $16.0 million of separation costs, primarily consisting of consulting, legal, tax and other professional advisory services associated with the strategic actions.
Restructuring charges, separation costs and impairment charges for the nine months ended September 28, 2025 primarily consisted of impairment charges consisting of $100.0 million related to our Titan SGS asset group and $8.1 million due to our cessation of occupancy at a certain leased facility. In addition, the charges for the nine months ended September 28, 2025 included $32.1 million of separation costs, primarily consisting of consulting, legal, tax and other professional advisory services associated with the strategic actions, and termination charges related to the 2024 Footprint realignment plan.
2023 Footprint realignment plan
In 2023, we initiated the "2023 Footprint realignment plan," a restructuring plan primarily involving the relocation of certain manufacturing operations to existing lower-cost locations, the outsourcing of certain manufacturing processes and related workforce reductions. We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the plan of $11 million to $15 million. We expect to achieve annual pretax savings in connection with the 2023 Footprint realignment plan of $2 million to $4 million once the plan is fully implemented.
2024 Restructuring plan
During the fourth quarter of 2024, we initiated the "2024 restructuring plan," which included initiatives to optimize operations, reduce costs and enhance efficiencies across our business lines, including the relocation of select office administrative operations. The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan to be immaterial.
2024 Footprint realignment plan
During the second quarter of 2024, we initiated the "2024 Footprint realignment plan," encompassing several strategic restructuring initiatives. These initiatives primarily include the relocation of select manufacturing operations to existing lower-cost locations, the optimization of specific product portfolios through targeted rationalization efforts, the relocation of certain integral product development and manufacturing support functions, the optimization of
certain supply chain activities and related workforce reductions. The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan to be immaterial.
VI Business integration plan
During the fourth quarter of 2025, the Board of Directors approved a restructuring plan related to the integration of the VI Business into Teleflex (the "VI Business Integration plan"). The VI Business Integration plan encompasses the realignment of the global sales force and certain administrative functions, including workforce reductions, and the relocation of certain manufacturing operations to existing lower-cost locations. These actions are expected to be substantially completed by the end of 2028. The following table provides a summary of our estimates of restructuring and restructuring related charges by major type of expense associated with the VI Business Integration plan:
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VI Business Integration plan
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||||||||
| Plan expense estimates: | (Dollars in millions) | |||||||
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Restructuring charges(1)
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$26 million to $31 million
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|||||||
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Restructuring related charges(2)
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$10 million to $13 million
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|||||||
| Total restructuring and restructuring related charges |
$36 million to $44 million
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(1)Substantially all of the charges consist of employee termination benefit costs.
(2)Restructuring related charges represent costs that are directly related to the program and principally constitute costs to transfer manufacturing operations to existing lower-cost locations and project management costs. The majority of these charges are expected to be recognized within cost of goods sold.
We expect all the restructuring and restructuring related charges will result in future cash outlays, of which, an estimated $12 million to $14 million are expected to occur during 2026. Additionally, we expect to incur $5 million to $7 million in aggregate capital expenditures under the VI Business Integration plan, which are expected to be incurred mostly between 2026 and 2027. We expect to achieve annual pre-tax savings of $24 million to $30 million in connection with the VI Business Integration plan once it is fully implemented and we expect to begin realizing plan-related savings in 2026.
For additional information regarding our restructuring plans, refer to Note 5 within the condensed consolidated financial statements included in this report.
Interest expense
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Interest expense | $ | 31.8 | $ | 21.1 | $ | 72.1 | $ | 64.9 | |||||||||||||||
| Average interest rate on debt | 4.1 | % | 4.5 | % | 4.1 | % | 4.5 | % | |||||||||||||||
The increases in interest expense for the three and nine months ended September 28, 2025 compared to the prior year periods were primarily due to an increase in the average outstanding debt balance stemming from new borrowings utilized to fund the VI Business acquisition, partially offset by a lower average interest rate resulting from decreases in interest rates associated with our variable interest rate debt instruments.
Taxes on income from continuing operations
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
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Effective income tax rate (1)
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6.8 | % | 15.0 | % | 1.6 | % | (2.3) | % | |||||||||||||||
(1)The effective income tax rates for the three and nine months ended September 28, 2025 and the nine months ended September 29, 2024 represent an income tax benefit. The effective income tax rate for the three months ended September 29, 2024 represents income tax expense.
The effective income tax rates for the three and nine months ended September 28, 2025 reflect a non-deductible goodwill impairment charge related to the IU reporting unit. Additionally, the effective income tax rates for the three and nine months ended September 28, 2025 reflect a tax benefit associated with the impairment of the Titan SGS asset group. The effective income tax rate for the nine months ended September 28, 2025 reflects non-taxable favorable adjustments incurred in relation to foreign currency exchange rates, largely stemming from non-designated foreign currency forward contracts designed to hedge against the cash consideration for the VI Business acquisition. All periods include a tax benefit from research and development tax credits. The effective income tax
rate for the nine months ended September 29, 2024 reflects a tax benefit associated with a pension settlement charge recognized in connection with the termination of the TRIP defined benefit plan.
On July 4, 2025, the One Big Beautiful Bill ("OBBB") Act was signed into law, enacting certain extensions and significant modifications to existing U.S. tax law provisions. While we continue to evaluate its implications, we do not currently expect the OBBB Act to have a material impact on our 2025 results of operations.
Segment Financial Information
| Segment net revenues | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | % Increase/(Decrease) | September 28, 2025 | September 29, 2024 |
% Increase/ (Decrease) |
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| Americas | $ | 555.9 | $ | 515.9 | 7.8 | $ | 1,557.3 | $ | 1,525.5 | 2.1 | |||||||||||||||||||||||||
| EMEA | 234.2 | 150.2 | 55.9 | 551.6 | 456.9 | 20.7 | |||||||||||||||||||||||||||||
| Asia | 122.9 | 98.3 | 25.0 | 285.7 | 269.5 | 6.0 | |||||||||||||||||||||||||||||
| Segment net revenues | $ | 913.0 | $ | 764.4 | 19.4 | $ | 2,394.6 | $ | 2,251.9 | 6.3 | |||||||||||||||||||||||||
| Segment operating profit | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | % Increase/(Decrease) | September 28, 2025 | September 29, 2024 |
% Increase/ (Decrease) |
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| Americas | $ | 176.0 | $ | 174.0 | 1.2 | $ | 501.8 | $ | 496.6 | 1.0 | |||||||||||||||||||||||||
| EMEA | 27.6 | 34.7 | (20.4) | 101.7 | 94.1 | 8.1 | |||||||||||||||||||||||||||||
| Asia | 20.5 | 33.7 | (39.1) | 61.5 | 85.6 | (28.1) | |||||||||||||||||||||||||||||
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Segment operating profit (1)
|
$ | 224.1 | $ | 242.4 | (7.5) | $ | 665.0 | $ | 676.3 | (1.7) | |||||||||||||||||||||||||
(1)See Note 14 to our condensed consolidated financial statements included in this report for a reconciliation of segment operating profit to our condensed consolidated income from continuing operations before interest and taxes.
Comparison of the three and nine months ended September 28, 2025 and September 29, 2024
Americas
Americas net revenues for the three months ended September 28, 2025 increased $40.0 million, or 7.8%, compared to the prior year period, which was primarily attributable to net revenues of $25.1 million generated by the acquired VI Business and increases in sales volumes of new and existing products, mostly in our Interventional and Surgical product categories.
Americas net revenues for the nine months ended September 28, 2025 increased $31.8 million, or 2.1%, compared to the prior year period, which was primarily attributable to net revenues of $25.1 million generated by the acquired VI Business, a $21.5 million increase in sales of new products and price increases. The increases in net revenues were partially offset by a $24.5 million decrease in sales volumes of existing products, primarily driven by declines in sales related to our OEM product category and UroLift product line.
Americas operating profit for the three months ended September 28, 2025 increased $2.0 million, or 1.2%, compared to the prior year period, which was primarily attributable to an increase in gross profit resulting from higher sales, including revenue generated by the acquired VI Business, partially offset by the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, unfavorable fluctuations in foreign currency exchange rates and higher manufacturing costs. The increases in operating profit were also adversely impacted by increases in operating costs incurred by the acquired VI Business.
Americas operating profit for the nine months ended September 28, 2025 increased $5.2 million, or 1.0%, compared to the prior year period, which was primarily attributable to an increase in gross profit as a result of revenues generated by the acquired VI Business and decreases in sales and marketing expenses related to our legacy businesses, partially offset by the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, increases in operating costs incurred by the acquired VI Business and an increase in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities.
EMEA
EMEA net revenues for the three months ended September 28, 2025 increased $84.0 million, or 55.9%, compared to the prior year period, which was primarily attributable to net revenues of $50.0 million generated by the acquired VI Business, the favorable impact of a $23.7 million decrease in our reserves related to the Italian payback measure and $9.1 million of favorable fluctuations in foreign currency exchange rates.
EMEA net revenues for the nine months ended September 28, 2025 increased $94.7 million, or 20.7%, compared to the prior year period, which was primarily attributable to net revenues of $50.0 million generated by the acquired VI Business, a $39.5 million net favorable impact from adjustments to our reserves related to the Italian payback measure, which was driven by the $23.7 million favorable adjustment recognized in the current period compared to an unfavorable adjustment of $15.8 million in the prior period, and favorable fluctuations in foreign currency exchange rates. The increases in net revenues were partially offset by a decrease in sales volumes of existing products.
EMEA operating profit for the three months ended September 28, 2025 decreased $7.1 million, or 20.4%, compared to the prior year period, which was primarily attributable to increases in operating costs incurred by the acquired VI Business and the unfavorable impact within gross margin from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition. The decreases in operating profit were offset by favorable impacts within gross margin from an increase in revenues generated by the acquired VI Business and a decrease in our reserves related to the Italian payback measure.
EMEA operating profit for the nine months ended September 28, 2025 increased $7.6 million, or 8.1%, compared to the prior year period, which was primarily attributable to an increase in gross profit as a result of an increase in revenues generated by the VI Business Acquisition and the net favorable impact from adjustments in our reserves related to the Italian payback measure, partially offset the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition. The increases in operating profit were also impacted by favorable fluctuations in foreign currency exchange rates and an adverse impact from increases in operating costs incurred by the acquired VI Business.
Asia
Asia net revenues for the three months ended September 28, 2025 increased $24.6 million, or 25.0%, compared to the prior year period, which was primarily attributable to net revenues of $26.6 million generated by the acquired VI Business and a $9.4 million favorable impact from a stocking order in China related to recently implemented initiatives intended to expand the sales channel of intra-aortic balloon pumps and catheters. The increases in net revenues were partially offset by a decrease in sales volumes of existing products and price decreases, primarily due to the implementation of volume-based procurement programs in China.
Asia net revenues for the nine months ended September 28, 2025 increased $16.2 million, or 6.0%, compared to the prior year period, which was primarily attributable to net revenues of $26.6 million generated by the acquired VI Business and a $9.4 million favorable impact from a stocking order in China related to recently implemented initiatives intended to expand the sales channel of intra-aortic balloon pumps and catheters. The increases in net revenues were partially offset by an $11.3 million decrease in sales volumes of existing products and price decreases primarily due to the implementation of volume-based procurement programs in China.
Asia operating profit for the three months ended September 28, 2025 decreased $13.2 million, or 39.1%, compared to the prior year period, which was primarily attributable to a decrease in gross profit that was primarily attributed to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, price decreases and unfavorable product mix, partially offset by gross profit generated from higher sales resulting from the acquired VI Business. The decrease in operating profit was also attributed to increases in operating costs incurred by the acquired VI Business.
Asia operating profit for the nine months ended September 28, 2025 decreased $24.1 million, or 28.1%, compared to the prior year period, which was primarily attributable to a decrease in gross profit that was primarily attributed to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, price decreases and unfavorable product mix, partially offset by gross profit generated from higher sales resulting from the acquired VI Business. The decrease in operating profit was also impacted by unfavorable fluctuations in foreign currency exchange rates and increases in operating costs incurred by the acquired VI Business.
We are currently monitoring increased inventory levels of our intra-aortic balloon pumps and catheters at some of our distributors in China, as we have observed that their sales to third parties have been slower than had been anticipated and in light of the recent stocking order related to our recently implemented initiative to expand the sales channel. If demand for our pumps and catheters does not increase, or our efforts to expand the sales channel are not successful, we could experience an adverse impact on our future results.
Liquidity and Capital Resources
We believe our cash flow from operations, available cash and cash equivalents and borrowings under our revolving credit facility will enable us to fund our operating requirements, including those arising from newly implemented tariffs, capital expenditures, debt obligations and separation costs for the next 12 months and the foreseeable future. We have net cash provided by United States based operating activities as well as non-United States sources of cash available to help fund our debt service requirements in the United States. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost effective basis.
Concurrent with the execution of the agreement to acquire the VI Business, we entered into foreign exchange derivative contracts with an aggregate notional value of €700 million to hedge economically against the foreign currency exposure associated with the cash consideration needed to complete the VI Business acquisition. These forward contracts were settled on June 30, 2025 concurrent with the completion of our acquisition. The settlement of the forward currency contracts resulted in proceeds of $82.2 million.
On July 30, 2024, the Board of Directors authorized a share repurchase program for up to $500 million of our common stock. On February 28, 2025, we entered into an accelerated share repurchase agreement for $300 million of our common stock, representing the remainder of the share repurchase program approved by the Board of Directors in 2024. Under this agreement, 1,725,253 shares of common stock, representing 80% of the $300 million aggregate, were delivered and included in treasury stock during the three months ended March 30, 2025. The initial shares received were calculated based on a price per share of $139.11, which was the closing share price of our common stock on February 27, 2025. Final settlement under the agreement occurred on April 9, 2025, at which time we received 493,150 additional shares of common stock. The total shares received were calculated based on a price per share of $135.23, which was based on volume-weighted average prices of our common stock during the accelerated share repurchase period less a discount.
On August 18, 2025, we executed two separate term cross-currency swap agreements set to expire on August 20, 2030 and August 20, 2032, respectively, to hedge against the effect of variability in the U.S. dollar to Swiss Franc (CHF) exchange rate, (the "2025 Cross-currency swap agreements"). Each of the 2025 Cross-currency swap agreements had a notional principal amount of $300 million and were designated as a net investment hedge. The 2025 Cross-currency swap agreements expiring in 2030 include six different financial institution counterparties and notionally exchanged $300 million for CHF 242.4 million at an annual interest rate of 3.15%. The 2025 Cross-currency swap agreements expiring in 2032 include four different financial institution counterparties and notionally exchanged $300 million for CHF 242.5 million at an annual interest rate of 3.02%.
In the fourth quarter of 2025, and prior to the original October 4, 2025 maturity date, we terminated the 2023 Cross-currency swap agreements and executed new cross-currency swap agreements with five financial institution counterparties. Under these new cross-currency swap agreements, which mature in March 2026, we notionally exchanged $500 million at an annual interest rate of 4.63% for €474.7 million at an annual interest rate of 2.77%. Further, the zero cost foreign exchange collar contract associated with the 2023 Cross-currency swap agreements matured in October 2025 resulting in an immaterial impact to our financial results.
Cash Flows
Net cash provided by operating activities from continuing operations was $189.0 million for the nine months ended September 28, 2025 as compared to $435.6 million for the nine months ended September 29, 2024. The $246.6 million decrease was primarily attributable to unfavorable changes in working capital and unfavorable operating results. The unfavorable changes in working capital were primarily driven by a net increase in accounts receivable resulting from of an increase in receivables associated with the VI Business (as we did not acquire certain trade receivables) and higher sales; and the prior period inflow from proceeds received from the TRIP termination included within prepaid expenses and other assets. Net cash provided by operating activities from continuing operations was also unfavorably impacted by recently enacted tariffs and higher tax payments.
Net cash used in investing activities from continuing operations was $826.8 million for the nine months ended September 28, 2025, and primarily consisted of $833.2 million in net payments for businesses and intangibles
acquired, primarily related to the VI Business acquisition, and $94.6 million of capital expenditures, partially offset by $82.2 million in proceeds from the settlement of foreign currency forward contracts entered to hedge economically against the foreign currency exposure associated with the VI Business acquisition and $9.5 million in insurance settlement proceeds.
Net cash provided by financing activities from continuing operations was $673.1 million for the nine months ended September 28, 2025, and primarily consisted of a $1.0 billion increase in net proceeds from borrowings under our Senior Credit Facility, partially offset by $300.0 million in repurchases of our common stock under the accelerated share repurchase agreement and $45.2 million in dividend payments.
Borrowings
The indentures governing our 4.625% Senior Notes due 2027 (the "2027 Notes") and 4.25% Senior Notes due 2028 (the "2028 Notes") contain covenants that, among other things and subject to certain exceptions, limit or restrict our ability, and the ability of our subsidiaries, to create liens; consolidate, merge or dispose of certain assets; and enter into sale leaseback transactions. As of September 28, 2025, we were in compliance with these requirements.
The obligations under our senior credit agreement (the "Credit Agreement"), the 2027 Notes and 2028 Notes are guaranteed (subject to certain exceptions) by substantially all of our material domestic subsidiaries, and the obligations under the Credit Agreement are (subject to certain exceptions and limitations) secured by a lien on substantially all of the assets owned by us and each guarantor.
Concurrent with the execution of the agreement to acquire the VI Business, we entered into an amendment to our Third Amended and Restated Credit Agreement (the "Credit Agreement") on February 24, 2025, which, among other things, (a) provides for a delayed draw term loan facility in an aggregate principal amount of $500 million, to be available to be drawn on the date on which we consummate the VI Business acquisition and (b) permits us to borrow up to $550 million under the revolving facility provided for under the Credit Agreement on a limited condition basis on the date on which the VI Business acquisition is consummated. Borrowings under the delayed draw term loan are to bear interest at a rate per annum equal to the applicable margin plus, at our option, either (1) the highest of (i) the "Prime Rate" in the U.S. last quoted by The Wall Street Journal, (ii) 0.50% above the greater of the federal funds rate and the rate comprised of both overnight federal funds and overnight euro transactions denominated in U.S. dollars and (iii) 1.00% above the Term SOFR Rate for a one month interest period, plus an applicable margin ranging from 0.125% to 1.00%, in each case subject to adjustments based on our total net leverage ratio or (2) a Term Secured Overnight Financing Rate ("SOFR") rate (which includes a credit spread adjustment of 10 basis points). The applicable margin for borrowings under the delayed draw term loan range from 1.125% to 2.00% for SOFR borrowings and from 0.125% to 1.00% for base-rate borrowings, in each case, depending on, at our election, either (x) our public corporate family rating or (y) our consolidated total net leverage ratio, in each case, based on the most recently ended fiscal quarter. The obligations under the delayed draw term loan will be guaranteed and secured on the same basis as the facilities provided for under the Credit Agreement. The delayed draw term loan will not amortize and will mature on the earlier of (x) the date that is two years after the date on which such loans are funded and (y) the maturity date for the revolving facility provided for under the Credit Agreement.
Subsequently, on June 24, 2025, we executed a further amendment to the Credit Agreement, increasing the aggregate principal amount of the delayed term loan facility by $200 million. After giving effect to the amendment, the delayed draw term loan facility provides for an aggregate amount of delayed draw term loan commitments of $700 million. On June 30, 2025, the first day of the third fiscal quarter of 2025, we drew $700 million under the delayed draw term loan facility in addition to $140 million of borrowings under our revolving credit facility to fund the VI Business acquisition, inclusive of transaction-related costs and other associated requirements.
Summarized Financial Information - Obligor Group
The 2027 Notes are issued by Teleflex Incorporated (the "Parent Company"), and payment of the Parent Company's obligations under the Senior Notes is guaranteed, jointly and severally, by an enumerated group of the Parent Company's subsidiaries (each, a "Guarantor Subsidiary" and collectively, the "Guarantor Subsidiaries"). The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is directly or indirectly 100% owned by the Parent Company. Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the "Obligor Group") as of September 28, 2025 and December 31, 2024 and for the nine months ended September 28, 2025 is as follows:
| Nine Months Ended | ||||||||||||||||||||
| September 28, 2025 | ||||||||||||||||||||
| Obligor Group | Intercompany | Obligor Group (excluding Intercompany) | ||||||||||||||||||
| Net revenue | $ | 1,648.9 | $ | 239.5 | $ | 1,409.4 | ||||||||||||||
| Cost of goods sold | 1,018.5 | 196.7 | 821.8 | |||||||||||||||||
| Gross profit | 630.4 | 42.8 | 587.6 | |||||||||||||||||
|
Income (loss) from continuing operations
|
88.4 | 157.4 | (69.0) | |||||||||||||||||
|
Net income (loss)
|
88.3 | 157.4 | (69.1) | |||||||||||||||||
| September 28, 2025 |
December 31, 2024
|
|||||||||||||||||||||||||||||||||||||
| Obligor Group | Intercompany |
Obligor Group (excluding Intercompany) |
Obligor Group | Intercompany |
Obligor Group (excluding Intercompany) |
|||||||||||||||||||||||||||||||||
| Total current assets | $ | 1,182.5 | $ | 170.8 | $ | 1,011.7 | $ | 1,034.1 | $ | 201.2 | $ | 832.9 | ||||||||||||||||||||||||||
| Total assets | 2,847.2 | 259.9 | 2,587.3 | 2,815.2 | 277.8 | 2,537.4 | ||||||||||||||||||||||||||||||||
| Total current liabilities | 1,065.5 | 669.9 | 395.6 | 1,275.4 | 953.4 | 322.0 | ||||||||||||||||||||||||||||||||
| Total liabilities | 4,211.5 | 828.3 | 3,383.2 | 3,450.5 | 1,126.6 | 2,323.9 | ||||||||||||||||||||||||||||||||
The same accounting policies as described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above. The Intercompany column in the table above represents transactions between and among the Obligor Group and non-guarantor subsidiaries (i.e. those subsidiaries of the Parent Company that have not guaranteed payment of the Senior Notes). Obligor investments in non-guarantor subsidiaries and any related activity are excluded from the financial information presented above.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from the amounts derived from those estimates and assumptions.
In our Annual Report on Form 10-K for the year ended December 31, 2024, we provided disclosure regarding our critical accounting estimates, which are reflective of significant judgments and uncertainties, are important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions and conditions.
New Accounting Standards
See Note 2 to the condensed consolidated financial statements included in this report for a discussion of recently issued accounting guidance, including estimated effects, if any, of the adoption of the guidance on our financial statements.
Forward-Looking Statements
All statements made in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would," "should," "guidance," "potential," "continue," "project," "forecast," "confident," "prospects" and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about our business and the industry and markets in which we operate. These statements are not guarantees of future performance and are subject to risks and uncertainties, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements due to a number of factors, including changes in business relationships with and purchases by or from major customers or suppliers; delays or cancellations in shipments; demand for and market acceptance of new and existing products; the impact of inflation and disruptions in our global supply chain on us and our suppliers (particularly sole-source suppliers and providers of sterilization services), including fluctuations in the cost and availability of resins and other raw materials, as well as certain
components, used in the production or sterilization of our products, transportation constraints and delays, product shortages, energy shortages or increased energy costs, labor shortages in the United States and elsewhere, and increased operating and labor costs; our inability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with our expectations; our inability to effectively execute our restructuring programs; our inability to realize anticipated savings resulting from restructuring plans and programs; the impact of enacted healthcare reform legislation and proposals to amend, replace or repeal the legislation; changes in Medicare, Medicaid and third party coverage and reimbursements; the impact of tax legislation and related regulations; competitive market conditions and resulting effects on revenues and pricing; global economic factors, including currency exchange rates, interest rates, trade disputes, the implementation or threatened implementation of tariffs, sovereign debt issues, and international conflicts and hostilities, such as the ongoing conflicts between Russia and Ukraine and in the Middle East; public health epidemics and pandemics, such as COVID-19; difficulties entering new markets; and general economic conditions. For a further discussion of the risks relating to our business, see Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2024. We expressly disclaim any obligation to update these forward-looking statements, except as otherwise explicitly stated by us or as required by law or regulation.
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