Skip to content
    TFX
    Earnings call· Dec 2025(Q4 FY25)

    TELEFLEX Q4 FY25 earnings call TFX

    Feb 26, 2026 Source

    Executive summary

    Teleflex Q4 FY25 — Strategic Divestitures and Future Growth Focus

    Teleflex is undergoing a significant transformation, divesting its Acute Care, Interventional Urology, and OEM businesses to create a more focused, higher-growth 'RemainCo' centered on Vascular, Interventional, and Surgical segments. The company plans to deploy $1.8 billion in net proceeds from the divestitures for a $1 billion share repurchase and $800 million in debt repayment, aiming for significantly higher adjusted EPS in 2027 and beyond. While 2026 will be a transition year impacted by $90 million in stranded costs, management is confident in its mid-single-digit revenue growth profile and is implementing restructuring to drive future margin expansion.

    Highlights

    5

    • RemainCo delivered strong pro forma adjusted constant currency revenue growth of 4.7% year-over-year in the second half of 2025.

    • Strategic divestitures expected to generate $2.03 billion in cash proceeds, with $1.8 billion net after-tax, to be used for capital return and debt reduction.

    • Commitment to return $1 billion to shareholders via share repurchase program and repay $800 million in debt.

    • R&D expense for RemainCo expected to increase to approximately 8% of sales, up from 5% historically, to drive innovation.

    • Restructuring plan targeting approximately $50 million in annual pretax savings to mitigate stranded costs and streamline operations.

    Concerns

    4

    • 2026 adjusted EPS guidance of $6.25 to $6.55 includes a full year negative impact of $90 million in stranded costs related to divestitures.

    • 2026 adjusted operating margin expected to be approximately 19%, reflecting the full impact of $90 million in stranded costs with no offsetting benefits from TSA/MSA agreements during the year.

    • Uncertainty regarding tariff impacts, with $18 million in additional tariffs in 2025 on top of prior year, totaling approximately $35 million.

    • The company is currently led by an interim CEO while a search for a permanent leader is underway.

    Guidance & targets

    10
    CategoryTargetConfidence
    Adjusted EPS
    $6.25 to $6.55
    high materiality
    High
    Pro forma adjusted constant currency revenue growth
    4.5% to 5.5%
    high materiality
    High
    Adjusted Operating Margin
    approximately 19%
    high materiality
    High
    R&D investment as % of sales
    approximately 8%
    medium materiality
    High
    Net Interest Expense
    approximately $105 million
    medium materiality
    High
    Adjusted Tax Rate
    approximately 13.5%
    medium materiality
    High
    Divestiture Closing
    Second half of 2026
    high materiality
    High
    Stranded Costs Offset
    at least $90 million
    high materiality
    High
    Restructuring Savings
    approximately $50 million
    medium materiality
    High
    Underlying Steady-State Adjusted Operating Margin
    approximately 23%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Vascular
    Revenue growth was primarily driven by growth in central access, hemostatic, and atomization products, offset by a tough comparison from the prior year period due to military surge orders that did not repeat in 2025. Growth is on a year-over-year pro forma adjusted constant currency basis for H2 2025.
    		$472.7 million2.4%——
    Interventional
    Strong performance for the second half of 2025 was driven by a broad Interventional portfolio. Growth is on a year-over-year pro forma adjusted constant currency basis for H2 2025.
    Reported Vascular Intervention revenues: $202 million
    		$427.5 million8.1%——
    Surgical
    Revenue growth reflects the impact of volume-based procurement (VBP) in China. Underlying trends in core surgical franchise continued to be solid with strong double-digit growth from the majority of franchises, including instruments and automatic appliers. Growth is on a year-over-year pro forma adjusted constant currency basis for H2 2025.
    		$219.3 million3.2%——

    Operational metrics

    16
    Adjusted Gross Margin
    63.7%200 basis point decrease year-over-year
    FY25

    For 2025, on a continuing operations basis.

    Adjusted Operating Margin
    22.7%230 basis point decrease year-over-year
    FY25

    For 2025, on a continuing operations basis.

    Adjusted Net Interest Expense
    $93.6 millioncompared to $77.4 million in prior year
    FY25

    For 2025, on a continuing operations basis.

    Adjusted Tax Rate
    12.6%compared to 13.4% in prior year
    FY25

    For 2025, on a continuing operations basis.

    Adjusted Earnings Per Share
    $6.988.7% increase year-over-year
    FY25

    For 2025, on a continuing operations basis.

    Cash, Cash Equivalents and Restricted Cash Equivalents Balance
    $402.7 millioncompared to $285.3 million as of year-end 2024
    Q4 2025

    Balance at the end of the fourth quarter 2025.

    Stranded Costs
    $90 million
    FY26

    Costs associated with the classification to discontinue operations throughout 2026, included in 2026 adjusted EPS guidance.

    TSA and MSA Agreements Offset
    $90 millionfully offset stranded costs
    Annualized

    Estimated annualized amount from transition service and manufacturing service agreements expected to fully offset stranded costs once strategic divestitures close.

    Restructuring Annual Pretax Savings
    $50 million
    Annual

    Initial restructuring plan to mitigate stranded costs, streamline global operations, and improve long-term cost structure.

    R&D Expense as % of Sales (RemainCo)
    8%compared to approximately 5% historically (full Teleflex)
    FY26

    Strategic priority for investment going forward for RemainCo.

    Net After-Tax Proceeds from Divestitures
    $1.8 billion
    Post-divestiture close

    Expected net proceeds from the sale of Acute Care, Interventional Urology, and OEM businesses.

    Debt Repayment from Divestiture Proceeds
    $800 million
    Post-divestiture close

    Intention to repay debt with remaining proceeds from strategic divestitures after share repurchases.

    Share Repurchase Authorization
    $1 billion
    Post-divestiture close

    Previously announced share repurchase authorization, intended to be executed following the closings of the transactions.

    Underlying Steady-State Adjusted Operating Margin
    23%400 bps above fully burdened 2026 guidance
    FY27 and beyond

    Estimated underlying operating margin once TSA/MSA agreements reduce RemainCo's operating expense profile, offsetting stranded costs.

    Pro forma adjusted constant currency revenue growth
    4.7%year-over-year
    H2 2025

    This performance establishes a solid foundation for future mid-single-digit revenue growth profile.

    Tariff Impact
    $18 millionadditional on top of prior year
    2025

    The company's plan contemplates these tariffs, with uncertainty remaining post-Supreme Court decision.

    Industry KPIs

    3
    MetricValueDetails
    Tariff impact$18 millionUSD
    Segment franchise organic growth4.7%%
    Sales force commercial capacity buildfully integrated

    Deals & partnerships

    1
    2 separate buyersSale of Acute Care, Interventional Urology, and OEM businesses$2.03 billion total cash proceeds, $1.8 billion net after-tax proceeds

    The strategic divestitures will result in Teleflex RemainCo, a more focused and optimized portfolio centered on Vascular, Interventional, and Surgical businesses. Assets have been reclassified as discontinued operations.

    Risks & headwinds

    4
    Stranded costs related to strategic divestituresFull year 2026

    $90 million negative impact in 2026

    Mitigation: Expected to be fully offset by transition service and manufacturing service agreements (TSA/MSA) on an annualized basis upon closing of divestitures; initial restructuring plan targeting $50 million in annual pretax savings.

    Impact of Volume-Based Procurement (VBP) in China on Surgical business2025, some impact in 2026

    Reflecting impact of volume-based procurement in China (for Surgical growth of 3.2%)

    Mitigation: Lion's share of VBP impact is behind us now; underlying trends in core surgical franchise remain solid.

    Tariff uncertainty2025, contemplated in 2026 plan

    $18 million additional tariffs in 2025 on top of prior year, total approximately $35 million

    Mitigation: Plan contemplates full year of tariffs; potential upside if Supreme Court ruling reduces tariffs; inventory capitalization means relief would take at least 2 quarters.

    Interim CEO leadership during transitionOngoing

    Interim President and Chief Executive Officer

    Mitigation: Board is actively conducting a CEO search with Spencer Stuart, taking a disciplined and thorough approach to identify the right leader.

    What to watch in Q1 FY26

    5

    Divestiture closing progress

    Second half of 2026
    CurrentWorking through regulatory and other conditions
    TargetClosing of strategic divestitures

    Why it matters

    The closing of divestitures is critical for unlocking $1.8 billion in net proceeds for capital allocation and enabling TSA/MSA agreements to offset stranded costs, significantly impacting future EPS.

    As an update, we are working through the regulatory and other conditions to closing and continue to expect the sales to close in the second half of 2026.

    Q&A highlights

    8

    Confirm the split of $1.8 billion net proceeds between share repurchases and debt repayment.

    Confirmed $1 billion for share repurchase authorization and $800 million for debt paydown, specifically $700 million for the deferred draw revolver (Bison acquisition) and $100 million for the general revolver.

    “So it's $1 billion for the share repurchase. And that other $800 million, we are committed to paying down debt. So it will likely be the deferred draw revolver we put in place for the Bison acquisition of about $700 million, and then we'll put the other $100 million towards our revolver.”

    asked by Michael Matson · answered by John Deren

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation and Divestitures

    Teleflex is transforming into a more focused medical technologies leader by divesting its Acute Care, Interventional Urology, and OEM businesses for $2.03 billion in total cash proceeds, with net after-tax proceeds of approximately $1.8 billion. These divestitures are expected to close in the second half of 2026, creating "Teleflex RemainCo" focused on Vascular, Interventional, and Surgical segments. This strategic realignment aims to optimize the portfolio and position the company for higher growth.

    02

    Capital Allocation Strategy

    The company plans to use the $1.8 billion net proceeds from the divestitures to return significant capital to shareholders through a $1 billion share repurchase authorization and to reduce debt by $800 million. This includes repaying the $700 million deferred draw revolver used for the Bison acquisition and an additional $100 million towards its general revolver, enhancing financial flexibility and supporting future growth and value creation. These actions are intended to maximize shareholder value.

    03

    2026 Financial Outlook and Transition

    2026 is positioned as a transition year, with adjusted EPS guidance of $6.25 to $6.55. This guidance includes a full-year negative impact of $90 million in stranded costs related to the divestitures, which are expected to be fully offset by transition service (TS) and manufacturing service (MS) agreements on an annualized basis once the transactions close. The 2026 adjusted operating margin is projected at approximately 19%, reflecting these fully burdened stranded costs.

    04

    Cost Mitigation and Margin Expansion

    To address stranded costs and improve long-term cost structure, Teleflex has announced an initial restructuring plan targeting approximately $50 million in annual pretax savings, primarily through workforce reductions and capital asset rationalization, expected to be substantially completed by mid-2028. Management anticipates an underlying steady-state adjusted operating margin of approximately 23% once TSA/MSA agreements are in effect and stranded costs are mitigated, indicating significant future margin improvement.

    05

    RemainCo Performance and Growth Drivers

    The continuing operations (RemainCo) delivered 4.7% pro forma adjusted constant currency revenue growth in the second half of 2025, establishing a solid foundation. The company expects 2026 pro forma adjusted constant currency revenue growth to be in the range of 4.5% to 5.5%. Growth drivers include central access, hemostatic, and atomization products in Vascular, a broad Interventional portfolio, and strong double-digit growth in core Surgical franchises (e.g., instruments, automatic appliers), partially offset by volume-based procurement (VBP) in China.

    06

    R&D Investment and Innovation Focus

    Teleflex is increasing its R&D investment for RemainCo to approximately 8% of sales, compared to 5% historically for the full company. This increased focus is primarily directed towards the interventional and vascular spaces, reflecting a strategic priority on product innovation within the streamlined portfolio. The integration of BIOTRONIK's Vascular Intervention business is progressing well, with sales force integration and talent retention on track, contributing to future growth opportunities.

    AI-generated summary of the company’s earnings call. Not investment advice.