We're gonna cover life science tools, diagnostics, and the med device outsource manufacturing names for Raymond James. I'm happy to have the Integer team here with us today. I'm gonna kick it over to CEO Payman Khales to run through a presentation, and then we'll have some Q&A with CFO Diron Smith as well. With that, I'll pass it to you.
That's great. Thank you, Andrew. Good morning to everybody. Thanks for joining us today. A big thanks to Andrew and the entire Raymond James team and everybody who's in the meeting room and on the webcast with us today. Just before we get started, a reminder that I will be making some future-looking, forward-looking statements. I would encourage you to look at our filings, SEC filings for any information on that. With that, let me get to our business. Integer is a leading medical device contract development and manufacturing organization. We are a leader in the world with businesses. We do business with all the large MedTech companies around the globe, as well as many emerging customers.
you know, those customers that we believe have good products that have promising potential. About 60% of our business is in what we call our Cardiovascular business, and about 36% of it is in cardiac rhythm management, with 4% that we call other markets. I'm gonna be expanding on these businesses in the coming slides. In 2025, our business was, our revenues were approximately $1.85 billion. We have a global footprint. Our vision, it's important, that's what we come to work to do, is to help improve patients' lives.
We do that through working with our customers, helping them accomplish and reach their objectives, and we do that through unparalleled expertise in engineering and manufacturing while making sure that we offer unparalleled customer service. We have a very strong and deep breadth and portfolio of products. This is very important in terms of how we deliver value to our customers. The depth of our capabilities allow our customers to use Integer, if you will, as a one-stop shop. The depth of vertical integration allows us to do more of our customers' devices for them, help them simplify their supply chain, and also make sure that we can have, you know, continuously competitive products because we do more in-house all the while helping us expand our margins.
In terms of our investment highlights, I would start with the fact that we have a proven track record of performance. I'll be coming that in the coming slides. We have been executing a strategy that we put in place some eight, nine years ago, we've continuously executed on that, we've demonstrated that we can deliver results. We are very well-positioned in the MedTech ecosystem. We are in some of the most attractive markets within medical device, some of the fastest, more vibrant, and where most of innovation is taking place within that space.
As I mentioned, we have, we are well integrated with some of the largest MedTech companies in the world, as well as, some of the emerging innovators. Our differentiation is through our technical expertise, what our customers depend on to bring products into market faster, but also in terms of our scale, and ability to manufacture products for our customers effectively, efficiently, and, with very high quality. We have a very robust and diversified pipeline, which is kind of the growth engine that we have through the execution of our strategy and building critical capabilities and building continuously to strengthen our relations with our customers. We built a robust, pipeline that's diversified and that would be an indicator of, future growth, we believe.
One of the most important competitive advantages for us is our high-performance culture. Our people, we invest in our people to develop leadership, to develop talent. These people come to work every day to serve our customers and to make sure that we generate shareholder value. Lastly, but importantly, we have a very disciplined capital management. While we continue to invest in our business, we are an invest to grow business. We make sure that we manage our capital both effectively and responsibly. Talking a little bit about our growth markets, our Cardiovascular is made up of the products that we have in the different sub-markets that are listed on this slide.
You will recognize, some of the fastest-growing markets, such as Electrophysiology, Structural Heart and Neurovascular, Cardiovascular in Cardiac Rhythm management, and Neuromodulation. Obviously, Neuromodulation is a fast-growing markets. We, some eight years ago, we established what we call the growth teams, a grouping of product management, marketing, R&D, operations, that are focused on designing, developing, refining strategies, and overseeing the execution in each of our growth markets. What this allows us to do is have very deep knowledge and expertise of the markets, of these specific markets in terms of the therapies, the technologies that are emerging, the capabilities that we need to build.
Each of the growth teams continue to refine and execute that strategy and allow us to know exactly where we need to place our bets, where to invest, and how to make sure that those investments are paying off. This is something that has shown results that I'm gonna talk about, and we continue to refine and execute those strategies in these key growth markets. As part of what our growth teams have helped us develop, we have made a number of investments in recent years in critical capabilities. There are some that are listed there.
I'm not gonna read them all, but we have investment in those critical capabilities as part of a well-defined technology and capability roadmap in those areas where we feel we can deliver value to our customers. Some certain capabilities that are complex in terms of complex, you know, complex manufacturing, machining, laser cutting, et cetera, but also importantly, we've invested in rapid prototyping capabilities. Our customers are always in a race to bring products into market as fast as they can. By us allowing them to be able to iterate in the design development process, we help them bring products into market faster. We help them sometimes turn prototypes in the early stages of design development in days and not weeks and months.
That's and that's a tremendous value to our customers that helps us get deeper with them in the design development cycle. We've also have made and continue to make investments in our capacity both in addition to making sure that through lean tools, we get more out of our existing facilities. As we continue to grow, we wanna make sure that we have ample capacity so that we can continue to grow at above market performance. We made investment capacity that We've made investments in capacity in facilities across the globe, but also in the United States. You know, for example, in our Salem in our Salem, Virginia facility, as well as in our Alden, New York facility, some examples.
As part of our capability and technology roadmap, we have an M&A strategy. Those capabilities that we believe are better to acquire, we have developed a roadmap. We have, we maintain a healthy pipeline of acquisition targets, and I'm showing some of the more recent acquisition that we've made in recent years. You know, as an example, InNeuroCo was a very specific acquisition as it relates to capabilities in Neurovascular, which is one of our growth markets. They expand our capabilities in engineering as well as manufacturing. Most recently in 2025, we made a number of acquisitions, you know, a couple of acquisitions and some asset purchases in the coating space. Again, that's a vertical integration and differentiation strategy, which is all part of our roadmap.
In terms of how we deliver value to our customers and how we are differentiated from their perspectives is number one, that differentiated and unique technical expertise that our customers need to make sure that they're efficient and can bring products into market faster. We have a large breadth of capabilities. We have innovative technologies and scalable manufacturing. Our technical expertise is critical in the design development phase. As I mentioned earlier, our customers are trying to bring therapies into market as fast as they can, and they need companies like us to help them with that design development, not only in the early phase of the actual design of the product, but also as we go through the design development to make sure that the product is designed for manufacturability.
This is incredibly important for efficiency and cost competitiveness to make sure that we can scale. In terms of our breadth of capabilities, we can go anywhere from complete full devices all the way down to complex components and subassemblies and everything in between. We work with our customers. Obviously, we continuously to work with them to make sure that we increase our portion of the BOM, but we have flexibility to work with them and deliver value to them in those areas that matters to them and where they're looking for value. We have innovative capabilities and technologies, both in terms of material selection, both in terms of a number of proprietary processes that are critical for manufacturing, but we also have a portfolio of products that we own.
we own the design development of these products that our customers use us, become a distributor for those products. We put their names on it, we package it for them, et cetera. That gives them yet another unique advantage. Lastly, but also importantly, our scalable manufacturing and our ability, our expertise in manufacturing global footprint is something that is important for them. They want to make sure that as we help them with the design development and as products, you know, get into market and ramp, that that movement from development to scaled manufacturing is seamless and something that we have demonstrated that we can do for them. I talked about at the beginning about our portfolio of, excuse me, of our pipeline and how we have built a robust pipeline.
What you see, the graph that you see on the left is our product development sales. When we work with our customers to help them with the design development of novel next-generation products, we get compensated for that. As that design development revenue increases, that's a correlation with the size of our pipeline. What that indicates is that we have more programs in our pipeline. Those programs are more complex or larger, likely a combination of all three. We believe that this is a good leading indicator about the size of our pipeline, but also in terms of the health of our pipeline is the graph to the right. 80% of what's in our pipeline is in the faster-growing markets.
What that means is that the products that we're gonna be launching in the coming years and in the future are in the faster-growing markets, helping us move our WAMGR up as time goes by. That our product development sales have quadrupled since 2017. It's an increase of 300%. In terms of maybe sharing a little bit of what's in our pipeline, as I talked about, you know, we have our fast-growing, our faster-growing markets. In those, you know, faster-growing markets was in that 80% that I talked about in the previous slide is some samplings of the products. You see that we have programs in every one of our fast-growing markets, and we don't have one horse or two horses in this race.
There's not one product that we depend on to meaningfully move the needle. It's a combination of a lot of diverse products that collectively we believe will continue to fuel our growth engine and to get us back in above market performance, 200 basis points above market performance in 2027 and beyond. I do wanna touch a little bit at the beginning, I also said that in addition to working with the large global MedTech companies, we also work with the emerging innovators. We are selective in the companies that we work with. We typically work with those companies that we believe have a promising technology that can fuel our growth. We have about 40 customers that we have been working with in this grouping for a number of years.
These are mostly focused and concentrated in the Neuromodulation space. Of these 40 customers, we have about 11 that have products that are in the market. If you look at over time, you know, in 2018 our business was very small with this group, give or take $10 million, and this book of business has grown to about $125 million at the end of 2024. We expect that over time, over the next three to five years, this book of business will grow at a CAGR of high teens, 15%-20%, again, contributing to our growth. In our fourth quarter earnings on February 19th, I highlighted our revised and refined focus areas. These are just tweaks and refinements of our strategy.
I highlighted three focus areas, you know, one of them being customer success. Again, this is in recognition that we can only be successful if we position our customers for success. By helping them accomplish their objectives, they reward us by more business. We want to make sure that operational excellence is across our entirety of the business, not only in manufacturing. We introduced the concept of the Integer Operating System, which is something that we will be that we'll be working on in the coming years and making sure that we have a defined business system that every part of our business, the most important parts of our business, are efficient and utilize the lean principles. The Integer Production System, which is not new for us, will be an element of the Integer Operating System.
Again, making sure that based on the principles of lean, we continue to improve our business, we continue to impact our efficiency in a positive way, and making sure that we deliver quality products to our customers. Lastly, but also very importantly, make leadership impact highlights that we need to continuously invest in our people so that our leaders raise the bar in our performance. We have a very disciplined capital management. This capital management is primarily focused on organic investments in our business, in capabilities, for example, and capacity, as I talked about, in making tuck-in acquisitions that are very targeted, and that's based on a very specific product roadmap in terms of the capabilities that we need to add to our portfolio. Opportunistically, our board authorized a $200 million share repurchase program.
We announced on in February 19th that we have completed the $50 million share repurchase in fourth quarter of last year, and we announced an advanced share repurchase program for another $50 million that we are executing now. In recent years, we've invested between 5%-6% in capital in our business to continue to expand our capabilities, and we have made $700 million in acquisitions. The result of our strategy is what you see here, that between 2022 and 2025, we've grown at above market in the double digits at 12% CAGR.
We expanded, we've expanded our adjusted operating income by almost 400 basis points and also increased our EPS while maintaining our leverage within that range of 2.5x- 3.5x . For 2026, we have some headwinds that are a result of three products that I'm gonna be talking about. We expect that to be transient, and we expect to get back to market performance in the second half of this year and to above-market performance, 200 basis points above market performance in 2027. Our strategic financial objectives have not changed. We expect to deliver sales growth 200 basis points over market.
We expect to expand profit margins at twice the rate of our growth, our sales growth, all the while spending, excuse me, staying within the 2.5x-3.5x leverage. Now, in our financial outlook, I do wanna talk about the fact that we have three product headwinds again that are very isolated, you know, to the three products. We expect to work through those headwinds during the course of 2026 and get back to above market performance in 2027. Organically in 2026 we've guided to flat to up 3% and on a reported basis to flat ±1%.
We have some inorganic headwinds associated with a portable medical business that we exited primarily in 2025. We expect our adjusted EBITDA to be -3% to +3%. While we are responsible at managing our expenses, our variable costs, we're not making structural changes in our business because we expect to get back to growth as we weather through these headwinds. Our adjusted operating income, we expect it to be -5% to +1%. Adjusted net income to -4% to +3%.
The adjusted EPS numbers that you see there take into account that we repurchased about 2% of our shares in the fourth quarter of last year, and it also takes into account, you know, some of the shares that we're gonna be acquiring as part of the ASR. Just maybe talk, you know, quickly to this. I've mentioned this a few times. If you kinda do the walk from our 2025 revenue profile, what we've guided to what we're guiding to in 2026, if you take the impact of the three products that are giving us headwinds out of our numbers, the underlying business continues to be strong.
We expect that underlying growth to be about 4%-6%, but we do have a headwind of 3%-4% as a result of the decline, substantial decline of these three products in 2026 compared to 2025. As I mentioned earlier, you know, we do have some inorganic headwinds at 1.3% as a result of the portable medical business that we exited in 2025. There's some movement as a result of acquisitions and effects in there that is minimal, and that is the basis of our guidance in 2026. In conclusion, we have a strong business.
We have built a tremendous amount of capabilities that have allowed us to build a very strong pipeline. We continue to strengthen our relationships with our customers. We've demonstrated that our business can generate shareholder value, and we expect to weather some of the headwinds in 2026 and get back to above-market performance in 2027.
Fantastic. Thank you. Shifting into the Q&A a little bit, I wouldn't normally start with something that feels nearer term, but I'm going to because it's where I've gotten a lot of questions, and I think where you guys have probably since earnings as well. Maybe just can you share some thoughts on the cadence for 2026 in terms of top line and profits, whether you're kind of tracking how you expected or if there's any changes there from the end market or a particular program. Then lastly, what your visibility is into kind of the current year as you sit in now start of March and think out about, you know, that forecast.
Thank you for the question. Can you guys hear me? Okay. Our outlook has not changed since the preliminary outlook that we provided in October. We tightened the range of our guidance in February of this year. We held the midpoint of our sales outlook, you know, the same as the midpoint of the preliminary outlook that we had provided. We tightened the range around it, we also tightened the range on the higher side of the EPS range, you know, that we had provided. Our outlook for the year has not changed, in general. The markets that we participate in continue to be strong. The visibility that we have in our business is very good, very strong.
We have 12 months of forecast generally in our business. Our customers continue to give us rolling 12-month forecast, so we have good visibility. We've talked about the fact that our backlog, which think of our backlog as the order book, is in the $700 million range, give or take. You know, we started last year at $728 million. We ended at $675 million. It's actually back up, you know, to that $700 million range. It's been steady at $700 million. If you do the math, we got about a quarter and a half of our revenues in orders, and then we got visibility to forecast. Our visibility to product is strong, and our outlook has not changed.
Okay. That's, that's very helpful. You know, you mentioned some of the new products that are, that are a little bit problematic right now. You know, the way I kind of view it is these were some of the growth drivers that now are kind of out of the system for 2026, and there's a little bit of kind of a gap in the new product timeline for you. You talked about some new products that should start coming on later this year and really into 2027. Can you give a bit of flavor for where those are, you know, what parts of the market and kinda what has you excited about what's to come?
Sure. Let me highlight something, that the three products that are giving us headwinds are not a result of competitive losses, contract losses, any insourcing by customers. It's none of that. It's our supply relation with our customers as it relates to these products have not changed. We're still the supplier of these products. It's that, you know, our customers had expected and hoped, as had we, that the products would ramp and continue to be very strong in the marketplace, but the rate of adoption was less than what our customers and we had hoped. It's really a byproduct of very strong ramp in 2025, followed by a strong decline, which is together, you know, three products doing this at the same time is highly unusual.
You know, in any given year, you have a product that does better than the other. It's not an event. This became an event in 2026. We expect to weather this as we go through the year. The comps in the first half of the year in particular are the most difficult. As we get to the second half of the year, the comps get a little bit easier and that's when we expect to get back to market performance. We did mention that we will have some product launches in the second half of this year and in 2027, which is why we have confidence that we can get to above-market performance.
If we step back, we look at what is in our pipeline, you know, I gave some sampling of that in the, in one of the slides that I have. You see that it's a diversified pipeline in all of our growth markets. Because we don't have one product that's the growth driver, if you will, when we step back and look at the range of expectations for these products when we risk adjust them, and in addition to the strong underlying business that's expected to grow at market, that's what gives us confidence to get to above market performance in 2027.
Okay, perfect. I wanna touch on a market that gets a lot of attention these days, PFA. You know, as I think the latest from Boston, the leader there is that 70% of the U.S. market has transitioned to PFA, and I think about 50% globally is what they say. It happened in pretty short order.
Mm-hmm.
How does that higher, you know, starting point penetration today and presumably, you know, slower shift, just 'cause there's less to be done in the U.S., impact the growth trajectory for Integer as you think about... I think for EP you had mid-teens growth through, I believe it's 29% in the slide. You know, how does that kind of play out and, and what's the PFA impact within that EP segment?
Yeah. Let me start by saying that we have had a strong presence in the EP market for quite a number of years. We've made heavy investments in that space, and our EP business portfolio has done really well for the past four or five years, long before PFA was a thing. That's because our exposure to Electrophysiology is not only the ablation part. We have exposure to all steps of the procedure. Every device that is used in every step of the procedure, whether, you know, we have access to the full device, part of the device or some components, we got exposure to all of that. As obviously as PFA has been driving a lot of procedure volume, that's given us tailwind in addition to us having exposure to PFA itself.
Despite the fact that we have headwinds in Electrophysiology in 2026 because of these two products, if you take the impact of these two products out of our revenues in EP in 2026, the rest of our portfolio is expected to grow at market. Which by the way, in 2026 we expect to be in the mid-teens, as you, as you highlighted. It was a little bit stronger, you know, the market growth in 2025. In the 20%, maybe low 20% range and in the fourth quarter, kind of in the high teens, 20%. We are bullish about EP.
We believe that EP will continue to be a strength, you know, just because of the general exposure that we have not only to the whole procedure, but also to PFA itself.
I think we probably spend a disproportionate amount of time talking about EP, at least in my seat. You know, maybe the question for today that could be helpful is, what other areas do you think investors aren't spending the time on that we, that we should, that you're excited about in terms of growth?
Well, some of the other growth markets that I talked about. You know, we have had and continue to have a focus in Structural Heart. We have a pipeline of products, you know, that we're working on, you know, focused in delivery systems, for example. We're not as indexed in TAVR. We are more indexed in mitral and tricuspid. Although the base is smaller, we believe that this could be a growth, a growth engine for us in the coming years. We have a very strong pipeline in Neurovascular, and we have very strong capabilities in Neurovascular. Again, you know, smaller base, but we believe that it can give us growth in the coming years. I also talked about Neuromodulation.
You know, we have a, you know, diverse set of customers with very different therapies that have given us growth and that we expect as more of these customers come online with their products and as, you know, some of the same customers launch new products or next generation products, we will get growth from that book of business as well.
Great. I wanna check capital allocation briefly. You talked about the $50 million you've already that you did in 4Q, and then the ASR here in 1Q. Obviously, you know, we've seen the stock kind of draw down. It seems like you and the board look at that as overdone. You've got, you know, half the authorization left after the ASR. How do you think about balancing executing that versus dry powder for M&A and kind of what's out there in the landscape?
Yeah. Thanks, Andrew. I think when you first started just our capital allocation kind of approach, right? We wanna make sure that we're covering our capital expenditures as a priority. That's making sure that we have the right capabilities and capacity, in the right parts of the globe to serve our customers and drive the market and above market growth. That's our number one priority. You'll see in our guidance this year that we've set aside an appropriate amount for that. Tuck-in acquisitions, right? That continues to be a part of our long-term strategic growth is tuck-in acquisitions.
Being at the midpoint of our outlook range and our leverage, we believe that with our free cash flow and with being in that range, we have enough capacity to drive M&A with our tuck-in acquisitions. Recognizing that over the next couple of quarters, we're gonna be much more focused on execution and delivering through this air pocket. That leaves the, you know, share repurchase as really an opportunistic approach, right. As I just said, as we believe the capital is set aside and we have space for tuck-in acquisitions, that's where we felt it was appropriate to do the $50 million in fourth quarter and announce another $50 million for first quarter.
We just look at that as continuing to be opportunistic at the right time.
Maybe just can you share a little bit about what you're seeing out in the M&A landscape today, whether it's changed at all over the last kind of six or 12 months, maybe any particular areas that are of most interest?
I'll start here. I mean, the M&A pipeline remains strong and robust, right? It's a very diversified market. It's, we see a lot of opportunity in the spaces in the, in the markets that we focus on, as Payman mentioned. I wouldn't say that there's anything specific that's changed in that landscape. I think we have a lot of good opportunities in the landscape. It's about, as it usually is, the right timing of the right acquisition for the right price. Anything you wanna add, Payman?
Yeah. The only thing I would add is that obviously we are now focused on executing over the next couple of quarters, but the pipeline is very strong.
We're about a minute over, so I'll just say, you know, real quickly if there's anything you wanna leave investors with or the kinda classic what are people sort of missing about the story right now?
Well, the fact that the essence, the structure of our business, the substance of the business has not changed. We have, you know, demonstrated that we can deliver results. We have a very strong pipeline. We have three products that are giving us headwinds that are isolated. We have a very strong pipeline that we continue to add to and that we continue to execute. We fully expect to get back to destroy above market performance in 2027.
Perfect. Thank you so much. We'll head down to Amarante 1 for the breakout.
Great.
Thank you.